Uptrend likely to continue over the near term
By Harumi Taguchi, Principal Economist, IHS Global Insight
Key Points:
- Japan’s industrial production in November rose 1.5% month on month (m/m), reflecting the third consecutive month of increase in producers’ shipments (0.9% m/m). The shipment increase also contributed to the third straight month of declinein inventories and the producer’s inventory ratio dropped to 5.5%, the lowest level since April 2014.
- Major contributors to the solid increase in the index of industrial production (IIP) were general-purpose, production and business-oriented machinery, electronic machinery, electric parts and devices, and transportation machinery, reflecting improvement in external demand and the introduction of new car models.
IHS Global Insight Views:
Industry outlook for production in December was revised up to a growth of 2.0% m/m in response to upward revisions to electronic parts and devices, transport equipment and some other industry groupings. Industry also expects a continued growth of 2.2% m/m in January, thanks largely to increases in the production of general-purpose, production and business-oriented machinery, electronic machinery, electric parts and devices, and information and communication electronics equipment.
While the sustainability of external demand and weak domestic demand remain concerns, upward demand seems to be spilling over into wider industry groupings. This, together with progress in destocking, is likely to support an uptrend in Japan’s IIP over the near term.