Japan: Production growth could be approaching a cyclical peak – Nomura

Analysts at Nomura suggest that while brisk Japanese production in 2017 is consistent with their outlook, the outlook for weak production in January is unexpected.

Key Quotes

“We do not believe that the impact from unauthorized workers carrying out inspections at certain transport equipment manufacturers is enough to explain the drop-off. We believe it important to bear in mind that this could be due to monthly volatility.”

“The shipment-inventory balance suggests, however, that production is moving towards a cyclical peak, and while we find it difficult to envision a sharp drop in production throughout the manufacturing sector, we believe it is important to be aware that the rate of production growth could taper off sooner than we currently assume.”