Japan’s IP: Stagnation Rules Despite Monthly Gain

Industrial production in Japan broke higher in June rising by 2.1% month-to-month after declining 0.2% in May and by 1% in April. Manufacturing output rose by 2.4% in June. Main manufacturing sectors show consumer goods output fell by 2.5% on the month, intermediate goods output rose by 1.3%, and investment goods output rose by 2.3%. Outside of manufacturing, mining output fell by 3.1% while utilities- gas and electric - output grew by 4.7%, erasing several months of declines.

Sequential growth rates show total industry output gaining momentum rising 2.8% over 12 months, at a 4.4% annual rate over six months and stepping back only slightly to a 3.6% growth rate over three months. Manufacturing output has been relatively firm and steady over 12 months, six months and three months. Consumer goods output has been more mercurial in its behavior, rising 3.8% over 12 months, stepping up to an 11.2% annual rate of expansion over six months but then falling at a 3.7% annual rate over three months. Intermediate goods output, on the other hand, has shown steady but slow-paced expansion, rising 0.1% over 12 months, at a 1% annual rate over six months and at a 0.8% annual rate over three months. Investment goods output has been accelerating; it has a surging 5.6% growth rate over 12 months, which steps up to 8.9% over six months and steps up again to a 13.6% annual rate over three months. The capital goods part of Japan's economy appears to be doing quite well in contrast mining where declines occur on all these horizons and at an accelerating pace of contraction. Electric utility & gas output accelerates through 12-months to 6-months to 3-months.

On a quarter-to-date basis, output grew at a 1.2% annual rate in the just-completed second quarter. Consumer goods output and intermediate goods output increased by less than 1% in the quarter while investment goods output rose at a 3.5% annual rate.

The far-right hand column shows the change in output compared to January 2020. The result shows negative numbers for all the entries in the table except for utilities usage which is up by only 6.4% over this 5 1/2-year period. However, output in the other sectors shows declines. There's been no increase - no net increase - in output over this 5 1/2-year span. This is a real testament to the kind of lethargy that Japan's economy has been through during this period.