Economy in Brief: February 2022

Japan's industrial output fell by 1% in January after tumbling 0.8% in December. Still, output has a strong 18.7% (annualized) gain over three months on the strength of a 6.3% monthly gain in November. However, output is falling by 1.3% over 12 months and by 6.8% over six months.

In the quarter-to-date industrial output is up at a 2.6% rate, but that is all from the momentum generated back in November.

Manufacturing is following the same pattern as overall IP on this timeline.

Sectors show declines in consumer goods output and in output of intermediate goods in January as well as in December. Both also showed very sharp monthly gains in November. Both sectors show double-digit annualized growth rates of gain in the last three months while their growth rates are negative over six months and 12 months.

Investment goods are off on their own tangent. The output of investment goods rose by 1.8% in January, fell by 2.7% in December and rose by 2.8% in November. Investment goods show a gain in output over 12 months, a fall in double digits over six months and a strong but single-digit annualized gain over three months.

In the quarter-to-date, output falls for consumer goods but is rising for intermediate goods and for investment goods.

The mining sector shows output increases in two of the last three months but logs a drop over three months, six months and 12 months. And those declines are increasing more severely. Mining output also is falling in the quarter-to-date.

Looking at output changes since before Covid struck, the headline, manufacturing and all sectors are still lower on balance. Japan has not recovered to its pre-Covid level of activity and that means since that a two-year period there has been no growth either as would normally occur for a two-year period.