Commentary Directory

Japan Industrial Production: August 2023

Jacob Hess
September 28, 2023

Japan Industrial Production

9/28/2023 (August 2023)

0.0% MoM (-3.8% YoY)


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Shipments +0.1% MoM (-2.4% YoY)
Inventories -1.7% MoM (+8.4% YoY)

Japanese industrial production was unchanged in August while shipments edged up 0.1% MoM. Inventories, however, saw a sharp decline of -1.7% MoM. On an annual basis, production is down -3.8% YoY, and shipments have fallen -2.4% YoY. Slower activity has caused a build up in inventory over the past year, especially compared to shipments. The inventory ratio is up 8.4% YoY. The forecast for September and October, which estimates 5.8% MoM and 3.8% MoM respectively, indicates that production is expected to rebound slightly as we enter Q4.

Japan’s industry has more or less come to a halt as a build up in inventories over the last year suggests there is some excess capacity utilization in the economy. Despite that, forecasts are very optimistic on growth going forward, especially with the 5%+ growth expected in September. Looking at that estimate, it seems like there will be a downside surprise in the next report.