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Economy in Brief

 More Positive Indicators for Japan:  Production, Shipments and Inventories 
by Louise Curley July 31, 2006

As Carol Stone noted last Friday, economic conditions remain positive in Japan in spite of some easing in the labor market in June. METI (The Ministry of Economics, Trade and Industry) released preliminary data today on industrial production, shipments and inventories--all showing increases in June. Industrial production increased 1.9%. shipments, 0.7% and inventories, 0.5%.

The largest contributors to the rise in industrial production were: Transport Equipment, General Machinery and Electrical Machinery. The largest contributors to the rise in Shipments were: General Machinery, Iron and Steel and Electronic Parts and Devices. Shipments of Transport Equipment, in contrast to production declined 1.06%. Total Industrial production and shipments are shown in the first chart.

Even more encouraging than the data for June are the forecasts of the changes in industrial production for the current month and the month following. Currently the forecasts are for a 2.2% increase in July and a 3.7% increase for August. As the second chart illustrates, the forecasts rarely seem to see any declines in the months ahead and generally overstate any increases. Nevertheless, they do well in forecasting direction. The correlation between the two series .78..

Japan Jun  06 May 06 Jun 05 M/M Y/Y 2005 2004 2003
Industrial Production (2000=100)  105.7 103.7 100.8 1.93 4.86 101.6 100.0 95.1
  Transport Equipment 126.5 119.4 1230.3 5.95 5.15 121.0 114.8 107.2
Shipments (2000=100) 108.6 107.8 103.6 0.74 4.83 104.1 102.3 97.3
  Transport Equipment 121.9 123.23 118.0 -1.06 3.31 117.3 113.5 108.4
Inventories (2000=100) 93.9 93.4 92.3 0.54 1.73 92.8 90.0 91.1
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