Japan: Industrial production slows in January, but growth remains robust
February 28, 2011
In January, industrial production grew for a third month in a row, shored up by improving overseas demand. Industrial production grew a seasonally adjusted 1.3% over the previous month (preliminary release: +2.4% month-on-month). The reading came in well below the 4.0% gain expected by the market and also represented a decline compared to the 3.3% reported in December. The monthly increase was mostly driven by a significant rise in the production of transportation equipment (+7.0% mom), in particular of motorcycles and industrial vehicles and general machinery (+3.9% mom). On the other hand, the industrial production growth was dragged lower by declining output of electronic equipment and chemicals. In annual terms, industrial production growth decelerated from a 4.9% increase in December to a 3.5% expansion in January. As a result of the lower reading, annual average growth continued to slip, down from 15.9% in December to 14.7% in January, mainly reflecting the strong growth in the previous year (January 2010: +18.9% year-on-year). According to a survey published before the earthquake, manufacturers expect industrial output to continue to rise, expanding 0.1% in February and 1.9% in March.