January Industrial Production

Industrial production shows firm undertone; plans for future somewhat guarded

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February 27, 2015

  • Masahiko Hashimoto

Summary

◆The January 2015 indices of industrial production grew for the second consecutive month by +4.0% m/m, while exceeding market consensus (+2.7%). Results were positive with a broad range of industries reporting growth in production. The three-month moving average also grew for the fifth consecutive month by +1.4%, exceeding the previous month in the extent of growth. This shows that industrial production is now well on its way to a growth trend after hitting bottom in August 2014, with the extent of growth significantly more than last month.


◆According to METI’s production forecast survey, industrial production is expected to grow by +0.2% m/m in February 2015, but then decline in March by -3.2%. Production plans reflected great confidence over the past few months, but current results suggest a slowdown as we move into March, with future production plans expected to contrast greatly with the recent strength. This month’s results left an aftertaste of a certain amount of unease regarding the future.


◆According to the current production forecast survey, there are fears of a slowdown up ahead. However, we here at DIR predict that production will continue in a growth trend in the future. Export volume, whose growth has been no more than moderate in recent months, recorded major growth in January, and promises to see an increase in the pace of growth in the future. The growth in exports, which has occurred due to the expansion of overseas economies, is expected to pull industrial production up along with it. Growth in production stemming from export growth is then expected to act along with improved corporate earnings in mustering demand associated with domestic capital expenditure, and the ripple effect promises to stimulate demand for capital goods.

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