August Industrial Production
GDP growth rate will likely fall for second consecutive quarter in Jul-Sep period
September 30, 2015
Summary
◆The August 2015 indices of industrial production was down by -0.5% m/m, suffering a decline for the second consecutive month and falling well below market consensus (+1.0%). The shipment index was also down for the second consecutive month at -0.5% m/m, while the inventory ratio index grew for the first time in three months at +6.1%. This month’s results confirm that Japan’s economy is in a temporary lull. The adjustment phase in overseas demand centering on the US and China has a much deeper bottom than had been expected. Hence production and inventory adjustment is expected to drag on for a while.
◆These results, coupled with METI’s production forecast survey for September, point to the likelihood of a decline in the GDP growth rate during the Jul-Sep period (GDP figures to be announced on November 16). The important question here is what kind of a policy response the government comes up with. Expectations are growing in regard to concrete policy measures (The New Three Arrows), as well as additional monetary easing by the BOJ.
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