–METI Survey: Factory Output Likely to Slip 1.0% in April, Rise 4.4% in May
–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 rose 3.8% on the month in March for the first rise in three months on resumed auto output, coming in just above the median forecast of a 3.5% gain and partially recovering from the effects of suspended vehicle output over a safety test scandal that had also hurt other sectors, preliminary data released Tuesday by the Ministry of Economy, Trade and Industry showed.
It followed an unexpected decline of 0.6% in February and a 6.7% plunge in January.
From a year earlier, factory output posted a fifth straight drop, down 6.7%, largely in line with a consensus call of a 6.6% drop, after a downwardly revised 3.9 percent fall in the prior month.
The METI’s survey of producers indicated that output is expected to slip back 1.0% in April before a solid 4.4% rebound in May.
Preliminary first quarter GDP, due on May 16, is forecast by economists to post a slight contraction, hit by suspended vehicle production. Business investment is expected to slip after a strong rebound in the fourth quarter and private consumption remains sluggish amid elevated costs for daily necessities.
The key points from the data:
* Industrial production rebounded 3.8% on the month in March on a seasonally adjusted basis, coming in firmer than the median economist forecast of a 3.5% rise (forecasts ranged from 1.2% to 4.4% gains). It followed a 0.6% drop (revised down from a 0.1% fall) in February, a 6.7% plunge in January and a 1.2% rise in December.
* Production slumped a seasonally adjusted 5.4% on quarter in the January-March period after rising 1.1% in October-December, falling 1.4% in July-September and rising 1.3% in April-June. In fiscal 2023 that ended in March, production fell 2.0% after dipping 0.3% in fiscal 2022 and rising 5.5% in fiscal 2021.
* Based on its survey of manufacturers, METI projected that industrial production would rise 4.1% on the month in April (revised up from a 3.3% rise forecast last month) and rise a further 4.4% in May. Adjusting the upward bias in output plans, however, METI forecast production would dip 1.0% in April.
* From a year earlier, the production index fell 6.7% in March after falling 3.9% (revised down from a 3.4% drop), 1.5% in December and 1.1% in December. It was slightly softer than the median economist forecast of a 6.6% fall (forecasts ranged from 7.2% to 4.6% drops).
* Shipments of capital goods excluding transport equipment — a key indicator of business investment in equipment in GDP data — fell 2.1% on quarter in January-March after rising 0.9% in October-December, falling 3.2% in July-September and partially rebounding 1.3% in April-June.
* Capital investment rose 2.0% on quarter for the first rise in three quarters in the October-December GDP data, which showed the economy narrowly averted a second straight quarterly drop in October-December, and thus recession last year. The slight growth in Q4 was backed by a rebound in both business investment and net exports, offsetting the drag from declines in consumption and public works.
* The seasonally adjusted index of industrial production (100 = 2020) stood at 101.1 in March, up from 97.4 in February. 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.