In February, industrial production contracted 2.3% over the previous month in seasonally-adjusted terms, which contrasted the 3.8% increase recorded in January (previously reported: +4.0% month-on-month). The print represented the sharpest decline since June 2013 and contrasted the 0.3% increase that markets had expected. According to the Ministry of Economy, Trade and Industry, the sectors with the greatest contribution to the monthly fall were transport equipment, general-purpose, production and business oriented machinery, as well as information and communication electronics equipment. Despite the monthly drop, the government maintained its general assessment, stating that industrial production, “shows an upward movement,” in Japan. On an annual basis, industrial output expanded 6.9% in February. The increase followed the 10.3% rise observed in January, which had marked the largest annual gain since April 2012. Annual average growth in industrial production rose from 0.4% in January to 1.8% in February, marking the highest level in 17 months. Meanwhile, the Survey of Production Forecast showed that manufacturers are becoming more optimistic. They now expect industrial output to have recorded a month-on-month 0.9% increase in March, which contrasted the 3.2% drop that was forecast in the previous month's survey. Conversely, manufacturers expect a 0.6% decline in April. FocusEconomics Consensus Forecast panelists see industrial production expanding 4.8% in 2014, which is up 0.1 percentage points over the previous month's projection. In 2015, the panel expects industrial production to rise 3.2%.
Industrial production records sharpest drop in eight months in February
March 31, 2014
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Japan Industry Chart
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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