November Industrial Production

◆In Indices of Industrial Production (preliminary; Ministry of Economy, Trade and Industry [METI]), November industrial production saw the third m/m gain in a row (up 0.1%). Although undershooting the consensus expectation (up 0.4%), the November figure confirmed that production remains on an underlying uptrend. Shipments saw the first slide in three months (down 0.1%), while inventories posted the fourth monthly slide in a row (down 1.9%), resulting in a decline (improvement) in the inventory-shipment ratio (down 1.4%).

◆Production was mixed by industry, up m/m in eight, down in seven. Among those that saw advances and pushed up overall production were transportation equipment, info/communications equipment, and chemicals.

◆METI’s production forecast survey projects strong gains in overall production in December 2013 (up 2.8% m/m) and January 2014 (up 4.6%). Considering that both the revision ratio and realization ratio vs. projections have been negative figures, centering on general-purpose/production/business-oriented machinery, strong projections by industries should be discounted to some extent. However, the bullish projection of a production increase by the transportation equipment industry is likely factoring in a demand surge prior to the April consumption tax hike. Thus, production trends require close monitoring going forward.