December Industrial Production

◆The December 2013 indices of industrial production boasted its first m/m gains in two months at +1.1%. Though slightly below market consensus (+1.3%), the growth trend in industrial production was confirmed by these figures. The shipment index was also up by 0.6%, showing m/m growth for the first time in two months, while the inventory index recorded a m/m decline of 0.4%, the fifth consecutive month of declines.

◆As for December production by industry, thirteen out of the total of fifteen industries recorded m/m gains, with production increases seen in a broad range of industries. Of these, general-purpose/production/business-oriented machinery, metal products, and the electronic parts and devices industry contributed the most. These industries were projected to have gains in production on last month’s production forecast survey, so performance was as expected.

◆METI’s production forecast survey projects especially strong growth in the upcoming months, with production plans for January 2014 up 6.1% m/m and February up 0.3%. In the general-purpose/production/business-oriented machinery industries, both the revision ratio and realization ratio continued to report negative numbers, meaning that strong projections by industry need to be discounted to some extent. However, plans for major production increases in the transport machinery and info/communications equipment industries indicate that businesses have locked their sights on last minute demand due to upcoming tax increases. These highly confident production plans are therefore considered to have good feasibility.