July 30, 2014

In June, industrial production contracted 3.3% over the previous month in seasonally-adjusted terms, which contrasted the revised 0.7% increase recorded in May (previously reported: +0.5% month-on-month). The print was well below the 1.2% decline that markets had expected and represented the largest drop since March 2011.



According to the Ministry of Economy, Trade and Industry, the categories that made the greatest contribution to the monthly drop were transport equipment, general-purpose, production and business oriented machinery and information and communication electronics equipment. As a result of the sharp downturn, the government revised down its general assessment, stating that industrial production in Japan is, “on a weaker note.”



On an annual basis, industrial output expanded 3.2% in June, which was above the 1.0% increase tallied in the previous month. Annual average growth in industrial production rose from 4.0% in May to 4.7% in June, marking the highest level since April 2011.



Meanwhile, the Survey of Production Forecast showed that manufacturers are becoming more optimistic. They now expect industrial output to have recorded a month-on-month 2.5% increase in July, which was above the 1.5% rise that was forecast in the previous month’s survey. In addition, manufacturers expect a 1.1% expansion in August.

FocusEconomics Consensus Forecast panelists see industrial production expanding 4.8% in 2014, which is down 0.2 percentage points over the previous month’s projection. In 2015, the panel expects industrial production to rise 2.7%.