Japan April Industrial Production Unexpectedly Slips on Pullback in Aircraft Engine Parts After Sharp Gain; Vehicle Output Also Falls

–METI Survey: Factory Output Likely to Rise 2.3% in May, Fall 5.6% in June
–METI Keeps View: Output Has Weakened While Taking One Step Forward, One Step Back
–METI To Keep Watching Effects of Global Growth, Resumed Auto Output

By Max Sato

(MaceNews) – Japan’s industrial production fell a seasonally adjusted 0.1% on the month in April after an upwardly revised 4.4% jump in March, as output by the transport industry excluding automobiles (aircraft engine parts) slumped in payback for a sharp gain in the previous month and vehicle output also slipped from a sharp rebound in March when production resumed after two months of suspension at Toyota group firms over a safety scandal, preliminary data released Friday by the Ministry of Economy, Trade and Industry showed.

It was weaker than the median forecast of a 1.6% rise, with some projecting a slight drop.

From a year earlier, factory output posted a sixth straight drop, down 1.0%, slightly firmer than a consensus forecast of a 1.2% drop (some had expected a rebound), after an upwardly revised 6.2 percent slump in the prior month.

The METI’s survey of producers indicated that output is expected to post a solid 2.3% rise in May before falling a sharp 5.6% in June.

The ministry maintained its assessment after downgrading it for the first time in six months for the January data, saying industrial output “has weakened while taking one step forward and one step back.” The METI repeated that it will keep a close watch on the effects of global economic growth and resumed automobile production.

The key points from the data:

* Industrial production has been volatile. April’s 0.1% drop followed a 4.4% surge in March, a 0.6% dip in February, a 6.7% plunge in January and a 1.2% rebound in December.

* Of the 15 industries, seven posted increases from the previous month and eight marked decreases. Higher production of semiconductor-making equipment and other production machinery partly offset a sharp drop in aircraft engine parts.

* Based on its survey of manufacturers, METI projected that industrial production is set to rise 6.9% on the month in May (revised up from a 4.4% rise forecast last month) and fall 5.6% in June. Adjusting the upward bias in output plans, however, METI forecast production would rise 2.3% in May.

* The seasonally adjusted index of industrial production (100 = 2020) stood at 101.6 in April, down slightly from a revised 101.7 in March. It is above the recent bottom of 87.6 reached in May 2020 but still below 108.8 in January 2020, when the pandemic hadn’t had a widespread impact yet. The index briefly jumped to 108.8 in April 2021, 109.0 in June 2021 and 107.8 in August 2022.