Japan May Industrial Production Rebounds 2.8% on Month, Led by Auto Industry as Resumed Vehicle Output Props Up Others 

–METI Survey: Factory Output Likely to Slip Back 6.0% in June, Rise 3.6% in July
–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 rebounded a seasonally adjusted 2.8% on the month in May after falling a downwardly revised 0.9% in April, thanks to emerging positive effects of vehicle output that was resumed in March after being suspended for about two months over safety issues, preliminary data released Friday by the Ministry of Economy, Trade and Industry showed.

It was stronger than the median forecast of a 2.0% rise and topped the forecasts that ranged from 0.6% to 2.5% gains. The increase was also led by electric machinery including lighting fixtures and navigation systems for vehicles as well as by general machinery such as conveyors and turbines. 

From a year earlier, factory output posted the first increase in seven months, up 0.3%, following a downwardly revised 1.8% slump in the prior month. It was firmer than the consensus forecast of a 0.1% dip.

The METI’s survey of producers indicated that output is expected to slip back 6.0% in June, led by lower output of production machinery and vehicles, before rising 3.6% in July on a rebound in production machinery and a rise in chemicals.

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.

More details from the data:

* Industrial production has been volatile. May’s 2.8% rebound followed a 0.9% drop in April, when output of 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. Output surged 4.4% in March after a 0.6% dip in February and a 6.7% plunge in January.

* Of the 15 industries, 13 posted increases from the previous month and two marked decreases. The largest contributors were passenger cars and auto parts. Lower output was seen in production machinery including semiconductor-producing equipment amid the uncertain outlook for global chip demand after a recent recovery.

* The seasonally adjusted index of industrial production (100 = 2020) stood at a five-month high of 103.6 in May, up from a downwardly revised 100.8 in April. 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.