Japan Feb factory output rebound slight amid slower global growth

29, Mar. 2019

TOKYO, NNA - Factory output in Japan rebounded modestly in February,

posting the first month-on-month rise in four months, but higher output of passenger cars and chip-making equipment was partly offset by the decline in output of electronic parts and devices amid slower global economic growth.

The Ministry of Economy, Trade and Industry released preliminary industrial production data on Friday.

Key points:

―― Industrial production in February rose 1.4 percent from the previous month, coming in firmer than the median economist forecast of +1.0 percent and rebounding from a sharp 3.4-percent drop in January.

―― The ministry said “the rebound was weak,” noting the January-February average industrial production index of 101.8 was lower than the 105.1 in the October-December quarter.

―― Based on its survey of manufacturers, METI projected industrial

production would rise 1.3 percent on month in March (revised up from -1.6 percent forecast last month) and gain a further 1.1 percent in April, but adjusting for the upward bias in output plans, METI forecast production would rise at a slower pace of 0.4 percent in March.

Takeaway:

―― METI maintained its assessment, saying, “Production is marking time.” The ministry projected that factory output is likely to show a quarter-on-quarter drop in January-March after rising 1.9 percent in the final quarter of 2018.

―― The data comes on the eve of the Bank of Japan's quarterly Tankan survey for March, due on Monday, which is expected to show a drop in sentiment among many business sectors, hit by the slowing Chinese economy and growing uncertainty over global growth.

―― The median economist forecast for the Tankan headline diffusion index for sentiment among major manufacturers is +14, down from +19 in December.