Japan: Industrial production drops sharply in March
April 28, 2011
On 28 April, the Ministry of Economy, Trade and Industry released the long-awaited outturn for March industrial production, which provides a first view of the impact of power shortages and supply chain disruptions on the manufacturing sector. In March, industrial production plummeted a seasonally adjusted 15.3% over the previous month, which represents the largest monthly decline on record. The decline was worse than expected, with market analysts expecting a more moderate 10.6% contraction. Compared to March last year, industrial production dropped 12.9% (market expectations: -8.5% year-on-year). The monthly decline was broad-based as power cuts and the lack of supplies disrupted production well beyond the devastated area. The worst results were registered in transportation equipment (-46.4% month-on-month) and machinery industry (-21.8% mom). The quake hit the Japanese industry at a moment of resilient growth, with annual average growth at 13.1% in February. The disruptions in the second half of March brought down annual average growth to 9.1% in March. According to the Survey of Production Forecast (changes in planned production on a month-on-month basis) from the same Ministry released on 28 April, manufacturers expect industrial output to rise in the coming months, expanding 3.9% over the previous month in April (previously expected -1.0% mom) and 2.7% in May.