MNI BRIEF: Japan Oct Factory Output Posts 2nd Straight Rise

Japan’s industrial output rose 1.4% m/m in October for a second straight increase, following a 2.6% rise in September, driven by higher production of automobiles, electrical machinery, and information and communication electronics equipment, data from the Ministry of Economy, Trade and Industry showed on Friday.

Automobile production climbed 6.6% m/m in October for a third consecutive increase after a 1.0% gain in September, while production of electrical machinery and information and communication electronics equipment rose 4.2% for a second straight rise following a 4.9% increase.

By contrast, production of electronic parts and devices fell 6.7% in October, marking the first decline in five months after a 3.7% rise in September.

Industrial output is a key indicator for economists at the Bank of Japan in assessing the pace of the current modest economic recovery, as it reflects both external and domestic demand.

Based on its survey of manufacturers, METI projected that industrial production would fall 1.2% in November, revised down from a previous forecast of a 0.9% decline, before dropping a further 2.0% in December. After adjusting for the typical upward bias in production plans, the ministry forecast output would fall 2.6% m/m in November.

On this basis, production is expected to rise 0.1% q/q in October-December for a third consecutive quarterly increase, following a 0.1% gain in the third quarter.

BOJ officials remain vigilant over the outlook for both production and exports, with major components of activity likely to face further headwinds from a slowing U.S. economy.