July 2023 Industrial Production

◆The July 2023 indices of industrial production declined for the first time in two months at -2.0% m/m, while at the same time falling below market consensus (-1.4%, according to the Bloomberg survey). Although production advanced in the motor vehicles industry, a major component in the indices, the influence of this factor was exceeded by major production cuts in semiconductor manufacturing equipment. The Ministry of Economy, Trade and Industry has therefore revised its economic assessment downwards to “Industrial Production fluctuates indecisively.”

◆As for the future of industrial production, for the time being the indices are expected to continue in a moderate growth tone on average, mainly due to recovery production in motor vehicles. On the other hand, the effect of recovery production on boosting the economy is expected to have run its course by some time in FY2023, and after that point, the indices of industrial production is likely to become sluggish due to weak overseas demand.

◆The July 2023 Indexes of Business Conditions are to be published on September 7, 2023, and the leading index is expected to be down by -0.9pt to 108.0, while the coincident index is expected to be down by -1.1pt to 114.0. Based on the predicted value, the underlying tone for July is automatically left unchanged at "improving".