Mar. 29, 2013, 16:00 JST

Production likely to resume expanding in March


Weak production trend among high-tech manufacturers

Industrial production in Japan shrunk by 0.1% month on month (MoM) in February, much weaker than the prior market expectation of 2.6% MoM expansion. Relative to production plans published a month ago, actual production was much weaker in electrical parts and devices (actual -5.0% MoM, planned: +14.5% MoM), information and communication machinery (actual: +2.0% MoM, planned: +9.0% MoM) as well as in transportation machinery (actual: +1.8% MoM, planned: +5.5%).  


Industrial production likely to follow exports in the current recovery phase

While the disappointments were frustrating for those hoping to see a quick expansion in the Japanese manufacturing, it is too soon to give up on Japanese manufacturers. It does seem like the final demands are beginning to recover. Between last October to February this year, exports have expanded by over 8% and advance data suggests that exports kept recovering in March. As you could see from the chart below, the speed of expansion in the industrial production seems to have lagged behind that of exports. It is probable that production will catch up in the coming few months.