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Japan Industrial production May 2021

Japan: Industrial output contracts at sharpest rate in a year in May

Industrial output fell 5.9% month-on-month in seasonally-adjusted terms in May, contrasting the 2.9% growth clocked in April and marking the steepest drop in 12 months.

On an annual basis, factory output rose at a faster rate of 22.0% in May (April: +15.8% yoy), the best result since April 2010 and boosted by a generous base effect. Moreover, the trend improved sizably, with the annual average variation of industrial production coming in at minus 3.7%, up from April’s minus 7.2% reading.

Regarding the outlook, Hiromichi Shirakawa and Takashi Shiono, economists at Credit Suisse, remain sanguine, commenting:

“We are not so concerned about the weak reading of May data, as the result of the METI’s prediction survey was encouraging, foreseeing a strong rebound of +5.4% mom in June for manufacturing output, driven by auto and technology industries. Since destocking made further progress on a whole industry basis, we believe that there is a high chance of industrial production recording a sharp gain in June.”

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