MNI BRIEF: Japan April Factor Output Posts 1st Drop in 3 Mths

Japan’s industrial production declined 0.9% month-on-month in April, marking the first drop in three months following a modest 0.2% gain in March, data from the Ministry of Economy, Trade and Industry (METI) showed Friday.

A 1.1% fall in automobile production, which contracted for a second straight month after a 5.9% drop in March, led the decline. The weakness reflected the impact of U.S. tariffs on Japanese auto exports. In contrast, production of electronic parts and devices posted a modest rise.

Bank of Japan economists closely monitor industrial output as a key indicator of domestic and external demand.

Looking ahead, METI’s latest survey of manufacturers projects a sharp 9.0% rebound in production for May, a significant upward revision from the previous 3.9% forecast. However, output is expected to decline again by 3.4% in June.

Adjusting the upward bias in output plans, METI estimates that production will likely rise 5.2% in May. If realised, this would result in a 2.3% quarter-on-quarter increase in output for the April-June period, the first quarterly rise in two quarters following a 0.3% decline in Q1.

BOJ officials are closely watching these developments, particularly the slowing U.S. economy, given its crucial role in driving Japan’s exports and production activity.