Japan: Industrial output unexpectedly grows in June
Latest reading: Industrial output—which makes up about 30% of Japan’s economy—rose 2.1% in month-on-month seasonally adjusted terms in June, after shrinking 0.1% in May. The reading beat market expectations of a contraction.
The output of passenger vehicles fell at a double-digit pace, likely weighed on by U.S. tariffs on the sector. However, the impact of this was outweighed by resilience elsewhere in the sector, with stronger readings record for electronic parts and vehicles—this may reflect a surge in demand before U.S. tariffs took effect in early August.
On an annual basis, industrial output increased 4.4% in June, contrasting May’s 2.4% shrinkage and marking the best result since September 2022. Accordingly, the trend pointed up, with the annual average variation of industrial production coming in at minus 0.4% in June, up from May’s minus 1.4% reading.
Panelist insight: Nomura’s Yuki Ito and Kyohei Morita said:
“The survey of manufacturers’ production forecasts points to a 0.5% decline in average output in Jul–Aug versus the Apr–Jun average. This is consistent with our view that Japanese real goods exports will be sluggish in Jul–Sep because of the economic slowdown in the US.”