MNI BRIEF: BOJ Vigilant Focuses On Production, Weaker Economy

Bank of Japan officials will focus on weak industrial production in Q2 as exports come under pressure due to the slowing global economy and shortage of semiconductors, despite supply chain issues easing.

The BOJ in March lowered its assessment on industrial production and exports amid weak data, noting they were more or less flat. The Bank's focus now shifts to how exports and production will evolve in Q2, and whether high levels of order backlogs for automobiles and capital goods will wane due to the slowing global economy.

Japan's industrial output rose 0.8% m/m in March, the second straight rise following a 4.6% gain in February, according to data published Friday by the Ministry of Economy, Trade and Industry. Higher production of motor vehicles, production machinery and electronic parts and chemicals drove the increase.

Based on its survey of manufacturers, the Ministry now projects industrial production will rise 4.1% in April and fall 2% in May. Adjusting the upward bias in output plans, the Ministry forecasted production would decline 2% m/m in April. Based on this assumption, and if June's output remains flat, production could fall 1.3% q/q over April-June, the third straight drop following a 1.8% fall in Q1.