Japan: Industrial production forecasted to decline 0.1% m-m in May - Nomura

Yoshiyuki Suimon, Research Analyst at Nomura, forecasts that the Japan’s industrial production index for May will come in at -0.1% m-m.

Key Quotes

This would give an average of +1.1% for Apr-May versus the Jan-Mar average, and a rebound from -1.0% q-q in Jan-Mar.

Looking at related data for May, real exports (our estimate) were up 0.2% m-m, a rebound from the decline of 1.9% in April but still lackluster. In addition, the manufacturing PMI output index fell from 47.8 in April to 46.3 in May, although this index has a weak correlation with industrial production. This was the fifth consecutive monthly decline, and the index was below the level of 50 that marks the threshold between expansion and contraction for the third consecutive month, suggesting a slowdown in production activity.

The survey of production forecasts for May sees output rising 2.2% m-m, but the actual production index tends to undershoot the projections on average, and applying the average amendment ratio over the past six months to the projection shows production coming in broadly flat month-on-month.

In view of the above, we forecast a decline of 0.1% m-m in May industrial production.”