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Economy in Brief

Japanese IP Dives – Back on Trend to Lower Results
by Robert Brusca October 15, 2008

What a shock to those that thought that decoupling was a reality. The US slowdown clearly has spread to Japan and to Europe. The August drop in output is just one of the visible signs. July’s 1.3% rise in IP is sandwiched between drops of 3.5% in August and 2.2% in June. The global slowdown is everywhere. The financial crisis, of course, is going to deepen it. The developing world ‘demand juggernauts’ India and China will not escape the slowing either.

The decline is hitting Japan especially hard in transportation as high gas prices have adversely impacted consumer budgets in the US. A key issue for Japan is that car sales have plummeted. Even makers of fuel efficient cars have seen demand fall off. The most highly sought after models have been in short supply. Thus, even fuel efficient auto makers are having trouble – no one escapes the downturn.

The outlook is for weakness to continue and probably to deepen. The hit to industrial output in Japan, while relatively severe, is not over.

Japan Industrial Production Trends
  m/m % Saar % Yr/Yr Qtr-2-Date
seas adjusted Aug-08 Jul-08 Jun-08 3-mo 6-mo 12-mo Yr-Ago % AR
Mining & mfg -3.5% 1.3% -2.2% -16.4% -10.1% -4.7% 4.4% -6.0%
Total Industry -3.6% 1.5% -2.2% -16.1% -10.2% -4.7% 4.4% -5.4%
MFG -3.5% 1.2% -2.1% -16.4% -10.1% -4.7% 4.4% -6.2%
Textiles -0.2% -2.9% -1.6% -17.5% -13.5% -10.0% -6.2% -20.9%
T-port -9.8% 4.0% -5.0% -36.9% -19.3% -7.8% 9.7% -9.3%
Product Group
Consumer Goods -3.3% 3.6% -3.1% -11.3% -8.0% -3.2% 6.3% 7.9%
Intermediate Goods -2.3% -0.2% -0.6% -11.7% -7.1% -2.6% 4.0% -7.0%
Investment Goods -5.2% -0.5% -2.9% -29.8% -18.5% -10.9% 2.8% -22.1%
Mining 1.6% 4.2% 1.9% 35.1% 15.3% 4.3% -1.1% 28.2%
Electricity & Gas -7.6% 6.3% -3.4% -19.2% -21.9% -5.1% 2.9% 1.4%
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