Japan Industry February 2016

Japan

Japan: Industrial production in February records largest drop in nearly five years

March 30, 2016

In February, industrial production fell 6.2% over the previous month in seasonally-adjusted terms, which contrasted the 3.7% increase tallied in January. February’s print exceeded the 5.9% decline that market analysts had expected and represented a 59-month low. Nevertheless, the drop in industrial production partially reflects a seasonal effect stemming from the Lunar New Year holidays.

According to the Ministry of Economy, Trade and Industry, the categories that made the greatest contributions to the monthly decrease were transport equipment, electronic parts and devices as well as general-purpose, production and business oriented machinery. As a result, the government maintained its basic assessment of industrial production, stating that output was "moving sideways."

On an annual basis, industrial output fell 1.5% in February, which followed the 3.8% decrease tallied in the previous month. Annual average growth in industrial production inched up from minus 1.0% in January to minus 0.9% in February.

The Survey of Production Forecast showed that manufacturers are becoming more optimistic. They now expect industrial output to have recorded a month-on-month 3.9% increase in March, which was better than the 3.1% rise that was forecast in the previous month’s survey. Manufacturers expect a 5.3% increase in April.

FocusEconomics Consensus Forecast panelists see industrial production expanding 1.2% in 2016, which is unchanged over the previous month’s projection. For 2017, the panel expects industrial production to rise 1.6%.


Author: Ricard Torné, Head of Economic Research

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Japan Industry February 2016

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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