(MaceNews) – Japan’s industrial production continued to crawl out of a pandemic-caused plunge seen in the spring on recovery domestic and overseas demand, marking a fourth straight month-on-month gain in September, but the level of output remains low, preliminary data released Friday by the Ministry of Economy, Trade and Industry showed.
The key points from the data:
* Industrial production rose 4.0% from the previous month in September, coming in stronger than the consensus economist forecast of +3.2% and led by higher output of passenger cars and production machinery. Some carmakers increased days of operations in response to higher demand while others noted recovering automobile demand in overseas markets, METI said.
* The pace of increase accelerated from +1.0% in August (revised down from a preliminary +1.7%). Production fell between February and May, with a steep 9.8% decline in April.
* The level of the Index of Industrial Production climbed to 91.6 (100 in the 2015 base year) from 88.1 in August, but it was still well below 99.8 at the start of the year. From a year earlier, IIP dipped 9.0% in September for a 12th straight year-on-year drop, with the pace of decrease continuing to decelerate from a revised 13.8% fall in August and a 26.3% slumped recorded in May.
* In the July-September quarter, production rose 8.8% from the previous three months after slumping 16.9% in April-June. It was the largest q/q gain under the current base year formula but METI noted that “the level of the index didn’t even recover a half of the loss, and thus a further recovery is expected.”
* Based on its survey of manufacturers, METI projected that industrial production would rise 4.5% on month in October (revised up from +2.9% forecast last month) and gain a further 1.2% in November. Adjusting the upward bias in output plans, METI forecast production would rise at a slower pace of 1.4% on month in October.
* METI maintained its assessment, saying, “Production is picking up.” Last month it upgraded its view from its previous statement that “moves toward a pickup is continuing.” At the same time, the ministry continued waring about the drag from a second wave of coronavirus infections.
* In September, shipments rose 3.8% on month for the fourth straight rise while inventories fell 0.3% for the sixth monthly decline in a row, both indicating a steady pickup from the plunge in economic activity seen earlier this year when many businesses were closed during the pandemic.
GRADUAL RECOVEYRY SEEN AHEAD
“Shipments of capital goods used for business investment had lagged behind those of durable and production goods since June, but they rose in September, indicating signs of recovery,” METI said in a statement.
As for the overall outlook, the Japanese economy is expected to recover part of the pandemic-triggered contraction in the next fiscal year.
In the face of intensifying headwinds from a second wave of coronavirus infections in many parts of the world, Bank of Japan policymakers on Thursday lowered their growth forecast for the current fiscal year ending next March, and revised up their projection slightly for fiscal 2021, a case of a deeper slump followed by a stronger rebound.
The median economic growth forecast by the BOJ’s board for the current fiscal year was revised down to -5.5% from -4.7% projected in July. The real GDP projection for the next fiscal year was +3.6%, revised up from +3.3% forecast three months ago, and that for fiscal 2022 was +1.6% vs. +1.5% in the previous outlook.
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