MNI BRIEF: Japan July Factory Output Fall First In Two Months

Japan's industrial output fell 2.0% m/m in July for the first drop in two months following June's 2.4% gain, due to lower production of machinery and electronic parts, and devices, although production for motor vehicles rose slightly, data released by the Ministry of Trade and Industry showed on Thursday.

July’s drop was largely in line with the Bank of Japan's view that industrial production has been more or less flat.

Production for electronic parts and devices fell 5.1% m/m in July for the first drop in two months following 6.8% in June. Motor vehicle production rose 0.6% in July for the second straight rise following 6.1% in June as the shortage of semiconductors eased. Based on its survey of manufacturers, the ministry projected industrial production would rise 2.6% in August (revised up from 1.1% forecasted last month) before rising 2.4% in September.

Adjusting the upward bias in output plans, the ministry forecasted production would fall 1.4% m/m in August. Based on this assumption, and if September output rises 2.4%, production would fall 1.3% q/q over Q3, the first drop in two quarters following 1.4% in Q2.