Japan: Industrial production continues to recover from the earthquake
July 29, 2011
Manufacturing continues to rebound from the 11 March earthquake, but has yet to fully recover to pre-quake levels. In June, industrial production grew 3.9% over the previous month in seasonally adjusted terms, following the revised 6.2% increase tallied in May (previously reported: +5.7% month-on-month). While output grew for a third consecutive month, the June figure fell short of expectations of a 4.5% expansion. Compared to June last year, industrial production slipped 1.6% (May: -5.5% year-on-year). The robust monthly reading was mainly supported by strong growth in transport and electronic equipment. The transportation industry expanded 18.5% over the previous month, while information and communication electronics equipments jumped 11.5%. The June report suggests that industrial output is firmly on a recovery trend, particularly in those industries severely affected by the quake and tsunami. As reported by the Survey of Production Forecast, manufacturers are still upbeat and see industrial output expanding 2.2% over the previous month in July (previously expected: +0.5% mom) and 2.0% in August. According to some analysts, while supply chain disruptions from the Tohoku earthquake seem to have ended, the main challenges for manufacturers in the coming months are summertime power shortages and the persistent appreciation of the yen.