MNI BRIEF: Japan Jan Factory Output Posts 3rd Straight Drop
MNI (TOKYO) - Japan's industrial output fell 1.1% m/m in January for the third straight drop following December's 0.2% decline due to lower manufacturing of production machinery and electronic parts and devices, although automobile output rose, data released by the Ministry of Economy, Trade and Industry showed on Friday.
Production of automobiles rose 6.9% m/m in January for the first rise in three months following -1.7% in December, despite slowing overseas demand. Production machinery fell 12.3% in January for the first drop in two months following +2.8% in December.
Industrial output is a key piece of data for BOJ economists to assess and predict the pace of the current modest economic recovery as it reflects both external and domestic demand.
Based on its survey of manufacturers, METI projected that industrial production would rise 5.0% in February (revised up +1.2% forecast last month) before falling 2.0% in March. Adjusting the upward bias in output plans, METI forecast production would rise 2.3% on month in February.
Based on this assumption, production would fall 1.2% q/q in January-March, the first drop in two quarters following 1.1% in Q4.
BOJ officials are paying attention to developments in the U.S. economy and its impact on production, as a key driver of Japanese exports and production.