June Industrial Production

◆The June 2014 indices of industrial production fell for the first time in two months, down by -3.3% m/m, while at the same time falling well below market consensus, which recorded -1.2% - all in all negative results. Production has been slowing down since its peak in January 2014, and the trend appears now to be strengthening. The shipment index also fell for the fifth consecutive month at -1.9% m/m, while the inventory index rose for the second time in two months by +1.9% m/m, hence accompanied by an increase in the index of inventory rate for the second time in two months at +3.5%.

◆As for production by industry in June, all industries except for “other industries” recorded declines. As of last month, METI’s production forecast survey had predicted growth in June for most industries, but most experienced declines instead, making these especially negative results. Looking at contribution to overall results, transport equipment, general purpose, production & business oriented machinery, and information communication equipment helped push overall results downwards.

◆According to METI’s production forecast survey, July production schedules are expected to a comeback at +2.5% m/m, while August is seen continuing gains at +1.1% m/m. As for July production plans by industry, most of the assembly industries are expecting declines, but general purpose, production & business oriented machinery and chemicals see high growth in production, which are expected to help push up overall results. Most industries are expecting a comeback in August.