Trial now

Corrective Cycle


Consolidating But Remains Bullish


Recovering, But Not Through Resistance


Consolidation Mode

MNI (London)
By Hiroshi Inoue
     TOKYO (MNI) - Japan's industrial production rose for a second straight
month in January, recovering from the sharp downturn in Q4, but Bank of Japan
officials are still cautious on the outlook, expecting the negative impact of
the coronavirus to begin in earnest this month.
     Japan's industrial production rose 0.8% m/m in January, a second straight
gain following a 1.2% gain in December.
     Bank officials had expected a bounce in January factory output following
weak Q4 data caused by a string of natural disasters and the October tax-hike.
     January's increase was led mainly by higher output of motor vehicles and
transport equipment excluding automobiles.
     Shipment of capital goods excluding transport equipment that BOJ officials
focus on fell 5.1% m/m in January for the first drop in two months following a
12.7% gain in December, indicating capital investment remained weak.
     Production of electronic parts and devices fell 1.3% m/m in January for the
first drop in four months following +12.7%, indicating that demand for
IT-related goods hasn't not been recovered smoothly.
     METI largely maintained its assessment, saying "industrial production
fluctuates indecisively, but has weakened." The government see production rising
5.3% (revised from +4.1%) in February before falling 6.9% in March.
     Adjusting the upward bias in output plans, the government forecast
production would rise 2.0% m/m in February.
     Based on this assumption, and if output is flat in March, production for
the January-March quarter would rise 0.3% q/q, the first rise in three quarters
following -4.1% in the October-December period.
     But the output for the first quarter would be weaker than the estimates as
the survey of production forecast shows the figures as of the 10th of each
month, meaning that the impact of the coronavirus, which has worsened since
mid-February, isn't included, the BOJ views.
     Bank officials don't expect industrial production recovering immediately,
buffeted between modest upward pressure from recovery production and weighed by
weak overseas demand and the disrupted supply chains in China.
     February's Tokyo core consumer price index, a leading indicator of the
national inflation rate, rose 0.5% y/y recording a 32nd straight rise, although
the pace decelerated from +0.7% in January.
     The data indicated that the nationwide core CPI for February will likely
fall from the 0.8% rise seen in January.
     The slowing inflation rate was mainly caused by lower prices for energy
item and for overseas holiday tours.
     BOJ officials are concerned that sluggish private spending and the drop in
Chinese tourists may lower consumer prices.
     They are also paying attention to how service prices, especially
eating-out, remain solid as service prices slowed to +0.7% y/y in February from
+1.0% in January.
     Prices for eating-out rose 3.6% in February from +3.5% in January.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
[TOPICS: MMJBJ$,M$A$$$,M$J$$$]
MNI London Bureau | +44 203-865-3812 |