Japan: Industrial production continues to grow albeit at a slower pace
August 31, 2011
Industrial output is moderating on the back of lower demand from developed economies and a surging yen. In July, industrial production grew 0.6% over the previous month in seasonally-adjusted terms, following the revised 3.8% increase tallied in June (previously reported: +3.6% month-on-month). While output grew for a fourth consecutive month, the July print undershot market expectations of a 1.4% expansion. On an annual basis, industrial production slipped 2.8% (June: -1.7% year-on-year). The monthly reading was mainly supported by strong growth in electronic equipment and transport. The information and communication electronics equipments jumped 15.7% over the previous month, whilst the transportation industry expanded 5.3%. In addition, general machinery rebounded to a 0.6% increase. As reported by the Survey of Production Forecast, manufacturers are still upbeat and see industrial output expanding 2.8% over the previous month in August (previously expected: +2.0% mom), but expect manufacturing to contract 2.4% in September. Industrial output is almost back at pre-quake levels, but the rising yen and slowing global demand are increasing concerns over the outlook for the months ahead. Moreover, the restocking process and restoration of the supply chain are drawing to a close.