August 2022 Industrial Production

◆The August 2022 indices of industrial production grew for the third consecutive month at +2.7% m/m, while at the same time exceeding market consensus (+0.2% according to the Bloomberg survey). August results differed from July when the majority of industries suffered declines – not only did a wide range of industries see improvements with the easing up of supply constraints, but strong demand for semiconductor manufacturing equipment provided a tailwind. The Ministry of Economy, Trade and Industry has therefore revised its economic assessment upwards to “shows signs of increase at a moderate pace.”

◆As for the future of industrial production, the index is expected to continue its tone of moderate growth. The easing up of supply constraints will likely provide a boost to the index. Meanwhile, growth in production will be encouraged by the accumulation of work-in-progress inventories of motor vehicles. On the other hand, increasing worries regarding a possible downturn of the US and European economies, as well as the future of China’s Zero-COVID policy remain cause for concern. Particular attention should be paid to the impact on motor vehicles and related industries, which are susceptible to fluctuations in overseas demand.

◆The August 2022 Indexes of Business Conditions are to be published on October 7, and the leading index, the composite index, is expected to be up by +1.6pt to 100.5, while the coincident index is expected to be up by +1.7pt to 101.8. Based on the predicted value, the assessment of the coincident index will automatically remain at “improving.”