Japan Industry


Industrial production expands most in 17 months

In May, industrial production rose 2.0% over the previous month in seasonally adjusted terms, which marks the strongest expansion observed since December 2011. The reading overshot both the 1.0% increase observed in April (previously reported: +1.7% quarter-on-quarter) and market expectations of a 0.2% rise. Moreover, the reading represents a fourth straight increase in the production index.

According to the Ministry of Economy, Trade and Industry, the sectors that contributed the most to the monthly increase were general-purpose, production and business oriented machinery, electrical machinery and chemicals instruments. Amid the continued improvement seen in recent months, the government maintains its assessment that Japan's industrial production is "showing signs of a gradual pickup."

On an annual basis, industrial output declined 1.0% in May, which was up from the 3.4% decrease witnessed in April. However, the trend continues to point downwards, with annual average growth in industrial production falling from minus 4.3% in April to minus 4.9% in May.

Meanwhile, the Survey of Production Forecast showed that manufacturers are becoming slightly less pessimistic and now see industrial output recording a month-on-month 1.4% drop in June, which is above the 2.4% decrease expected in the previous month's survey. In addition, manufacturers forecast a 3.3% rise in July.

FocusEconomics Consensus Forecast panellists see industrial production expanding 0.7% in 2013, which is up 0.3 percentage points over the previous month's projection. In 2014, the panel expect industrial production to rise 4.2%.

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Japan Industry Chart

Japan Industry May 2013

Note: Month-on-month changes of seasonally adjusted industrial production and year-on-year growth rate in %.
Source: Ministry of Economy, Trade and Industry (METI) and FocusEconomics calculations.

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