Japan: Industrial production declines in May

In May, industrial production fell 2.3% over the previous month in seasonally-adjusted terms, which contrasted April’s 0.5% expansion (previously reported: +0.3% month-on-month). May’s print exceeded the 0.2% contraction that market analysts had expected.

According to the Ministry of Economy, Trade and Industry, the categories that made the greatest contributions to the monthly decrease were chemicals (excluding drugs), general-purpose, production and business oriented machinery as well as electronic parts and devices. Despite May’s drop, the government maintained its basic assessment of industrial production, stating that output was "moving sideways without a clear direction."

On an annual basis, industrial output fell 0.1% in May, which followed the 3.3% decrease tallied in the previous month. Annual average growth in industrial production inched up from minus 1.3% in April to minus 0.9% in May.

The Survey of Production Forecast showed that manufacturers are becoming more optimistic. They now expect industrial output to have recorded a month-on-month 1.7% increase in June, which exceeded the 0.3% increase that was forecast in the previous month’s survey. Manufacturers expect a 1.3% increase in July.

FocusEconomics Consensus Forecast panelists see industrial production falling 0.7% in 2016, which is down 0.3 percentage points over the previous month’s projection. For 2017, the panel expects industrial production to rise 2.0%.