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MNI BRIEF: Japan's Q2 Factory Output Posts 4th Straight Rise

MNI (Tokyo)

The government outlook is for slower growth because of semiconductor shortages.

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Japan's industrial production for the April-June period posted the fourth straight quarterly rise but the outlook is expected to slow as production will be weighed down by lingering shortages of semiconductors.

Industrial production rose 1.0% q/q in the second quarter following +2.9% in the first quarter and +5.7% in the fourth quarter of 2020. June industrial production rose 6.2% m/m for the first rise in two months following -6.5% in May.

The government's assessment from the previous month was unchanged, noting "industrial production is recovering". It sees production falling 1.1% (revised up from -1.4%) in July before rising 1.7% in August. Adjusting for the upward bias in output plans, the forecast production would fall 2.2% m/m in July. Based on this assumption, and September flat, Q3 production would fall 1.1% q/q for the first drop in five quarters.

Industrial output remains a key piece of data for BOJ economists to assess the outlook, as it reflects both external and domestic demand, with the BOJ keeping to a view that industrial production and exports have increased.