Photographer: Tomohiro Ohsumi/Bloomberg

Japan's Industrial Production Hits Highest Level Since 2008

Updated on
  • April output rose from previous month by most since June 2011
  • External demand seen supporting continuing economic recovery

Japan’s industrial output rebounded in April, hitting the highest level since 2008, as overseas demand continued to support the nation’s economic recovery.

Highlights of Data 

  • Industrial production increased 4.0 percent (forecast +4.2 percent) in April from March, when it fell 1.9 percent.
  • Industrial production index rose to 103.8 in April, the highest level since October 2008.
  • Output is forecast to fall 2.5 percent in May and rise 1.8 percent in June.

Key Takeaways

A recovery in exports has helped drive Japan’s economy to five consecutive quarters of growth, the longest run in a decade. But there are risks to the outlook for global trade, including protectionism and geopolitics. Group of Seven finance chiefs agreed only to watered-down language about avoiding protectionism at their meeting in Italy. In Japan, stronger gains in wages and consumer spending will be needed for the economic recovery to become self-sustaining.

Economist Views

  • “Japan’s production is likely to remain solid," said Taro Saito. "It has been led by overseas demand from Asia, the U.S. and Europe amid a pickup phase in the global production cycle. Exports and production will continue to be the driving force for Japan’s continuing recovery."
  • "The recovery is gaining momentum," Saito said. "The BOJ must be confirming that their view is right on the path of the recovery so there is no prospect of a change in monetary policy for now."
  • “The results are strong with sectors like transportation machines gaining," said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. "Overseas demand is leading production higher. Trade data also show trade volume is growing. That shows the Japanese economy is on a firm recovery track with production rising, while it’s mainly due to overseas demand.”

Other Details

  • Measured year-on-year, production rose 5.7 percent (forecast +6.1 percent).
  • The gain of 4 percent month on month was the biggest since June 2011.
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