Free Trial

MNI POLICY: Japan Factory Output Supports BOJ Recovery View

Japan Oct Output Rises 3.8% M/M; Q4 Seen Rising 6.3%

Japan Oct Output Rises 4.2% Y/Y; 1st Rise in 13 Months

MNI (Sydney)
TOKYO (MNI)

Japan's industrial production rose 3.8% m/m in October for the fifth consecutive rise following +3.9% in September, supporting the Bank of Japan's view that industrial production will continue its momentum, MNI understands.

However, bank officials maintain their cautious view as businesses around the globe also remain cautious about implementing capital investment, and as demand for automobiles is expected to slow after pent-up demand.

Industrial output remains a key piece of data to aid BOJ economists in assessing the outlook as it reflects both external and domestic demand, and the data reinforced the BOJ view that industrial production and exports are increasing.

CAR OUTPUT RISES

October's +3.8% was led by higher production of general-purpose and business oriented machinery, motor vehicles and information and communication electronical equipment.

Car production rose 6.8% m/m in October following +11.4% in September, indicating that pent-up demand remained solid.

Auto production rose 4.2% y/y in October for the first y/y rise in 13 months following -4.1% in September. Transport equipment accounts for about 20% of Japan's total output with the auto industry alone accounting for about 3% of Japan's GDP.

Shipments of capital goods excluding transport equipment rose 13.4% m/m in October following a 2.7% rise in September, suggesting demand for capital investment for research and development remained solid.

Production for general-purpose and business oriented machinery rose 17.9% m/m in October, reversing from -6.9% in September.

Q4 SEEN STRONGER

The government left its assessment unchanged from the previous month, noting "industrial production is recovering" and sees production rising 2.7% (revised up from +1.2%) in November before falling 2.4% in December.

However, adjusting the upward bias in output plans, forecast production would rise 0.4% m/m in October. Based on this assumption, Q4 production would rise 6.3% q/q for the second straight rise following the 8.7% rise in Q3.

MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.