Japan Industry


January industrial production marks largest expansion in 31 months

In January, industrial production rose 4.0% over the previous month in seasonally-adjusted terms, which was well above the 0.9% increase recorded in December (previously reported: +1.1% month-on-month). The print represented the largest expansion since June 2011 and overshot the 2.8% increase that markets had expected.

According to the Ministry of Economy, Trade and Industry, the sectors with the greatest contribution to the monthly increase were transport equipment, general-purpose, production and business oriented machinery, as well as chemicals. The government maintained its general assessment, stating that industrial production, "shows an upward movement," in Japan.

On an annual basis, industrial output expanded 10.6% in January. The increase followed the 7.1% rise observed in December and marked the largest annual gain since April 2012. Annual average growth in industrial production jumped from minus 0.9% in December to plus 0.4% in January, marking the highest level in 13 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 1.3% increase in February, which is up from the 0.3% rise that was forecast in the previous month's survey. Conversely, manufacturers expect a 3.2% contraction in March.

FocusEconomics Consensus Forecast panelists see industrial production expanding 4.9% in 2014, which is up 0.2 percentage points over the previous month's projection. In 2015, the panel expects industrial production to rise 3.2%.

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Japan Industry Chart

Japan Industry January 2014

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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