MNI BRIEF: Japan May Production Posts 1st Drop In Four Months

Japan's industrial production fell 1.6% m/m in May for the first drop in four months, following 0.7% in April, due to weaker production for motor vehicles, electrical machinery and information, and communication electronics, the Ministry of Trade and Industry said Friday.

The weak May data will not prompt the Bank of Japan to change its view that industrial production has been more or less flat, as it expects June production to rise.

Production for motor vehicles fell 8.9% m/m in May for the first drop in four months, following a 2.4% gain in April. The shortage of semiconductors, however, eased. BOJ officials expect the slowing global economy to weigh on industrial production and exports. They are also focused on revised capex plans in the June Tankan survey due out Monday.

Based on its survey of manufacturers, the ministry projected industrial production to rise 5.6% in June (revised up from 1.2% forecast last month) before falling 0.6% in July. Adjusting the upward bias in output plans, METI forecasted production to rise 3.4% m/m in June. Based on this assumption, production would rise 2.1% q/q in April-June, the first rise in three quarters following the 1.8% fall in Q1.