— Japan Sep Industrial Output -4.0% M/M Vs Aug +0.6%
— Japan Sep Industrial Output MNI Poll Median Forecast -2.3% M/M
— METI Forecast Index: Japan Oct Output +2.3% M/M, Nov +1.8%
— Japan Jul-Sep Industrial Output +4.1% Q/Q Vs Apr-Jun -4.0%
— METI Downgrades View: Japan Output Appears To Be Flat
TOKYO (MNI) – Japan’s industrial output slumped more than expected
in September, posting the first month-on-month drop in six months, as
the effects of fixing earthquake-hit supply chains waned and global
demand for semiconductors slowed, government data showed Friday.
The yen’s continued rise is also making Japanese products more
expensive overseas and hurting exporter profits, raising concerns that
the export-led economic recovery may falter.
Production at the nation’s factories and mines fell a seasonally
adjusted 4.0% in September from the previous month, bringing the
industrial output index down to 89.9.
The index hit 93.6 in August, the highest since February, when it
stood at 97.9.
The September headline drop was worse than the median forecast
for a 2.3% fall by economists in a Market News International survey.
The seasonally adjusted drop in September was also below the 2.5%
m/m decline predicted in the ministry’s forecast survey released last
METI’s latest survey of firms’ forecasts showed that overall
production is expected to rebound by 2.3% m/m in October — revised down
from the 3.8% gain estimated in the previous survey — and it is
expected to increase by 1.8% in November (first estimate).
Based on the latest data and the outlook for the next two months,
METI downgraded its overall assessment, saying: “Industrial production
appears to be flat.”
It said last month that “Industrial production has largely
recovered from the aftermath of the Great East Japan Earthquake.”
In July-September, output rose 4.1% from April-June, posting the
first quarter-on-quarter increase in five quarters.
But even if October and November forecasts are met and December
output is unchanged, October-December output will show only a 1.0% q/q
rise, much slower than the third quarter gain.
The environment for Japan’s export-driven recovery does not bode
well for industry production.
The latest government data showed that exports rose 2.3% to Y5.98
trillion in September from a year earlier, slowing from a 2.8% rise in
To make matters worse, the yen hit a fresh all-time high of Y75.66
on Thursday, breaking records for the third straight day.
“While demand related to reconstruction of earthquake-ravaged
supply chains is weakening, consumer spending on durable goods is now
dwindling, leaving industrial output more susceptible to demand in
overseas economies,” said Takeshi Minami, chief economist at Norinchukin
“But overseas economies are now showing signs of slowing while the
yen’s rise is eroding the competitiveness of Japan-made goods in export
“Given these developments, the slackening in the recovery trend of
industrial output is most likely to continue for the rest of the year
and, depending on the length of the ongoing strength of the yen, the
recovery may fall apart,” he warned.
In September, output of transportation equipment — mostly
automobiles — fell 6.0% from the previous month, marking the first m/m
drop in five months following a 6.7% surge in the previous month.
The METI data showed that output of mini vehicles with engine
displacement of less than 660cc dropped 6.6% in September while output
of large passenger cars (over 2,000cc) fell 6.2% and output of small
passenger cars (over 660cc but less than 2,000cc) declined 9.1%.
Production of general machinery including chip-making machines
dropped 6.7% on year in September, posting the first y/y fall in three
months after rising 1.0% in August.
The strong yen led to the drop in semiconductor products machinery,
a METI official told reporters.
The impact of the massive flooding in Thailand that has hit Japanese
auto and electronics factories north of Bangkok was not yet reflected in
September output data, he said.
Compared with year-earlier levels, Japan’s industrial production in
September fell 4.0%, marking the first fall in two months, following a
0.4% gain in the previous month.
Other details from the latest data:
Shipments: Sep -2.6% m/m vs. +0.2% in Aug, the first fall in five
Inventories: Sep unchanged m/m vs. +2.1% in Aug.
The inventory-to-shipments ratio: Sep +4.2% vs. -1.4% in Aug,
showing the first rise in two months.
** Market News International Tokyo Newsroom: 81-3-5403-4835 **