Japan Industrial Production Published by: Ministry of Economy, Trade and Industry (METI), Japan Frequency: Monthly Period Covered: Prior month Volatility:

Japan Industrial Production

Published by: Ministry of Economy, Trade and Industry (METI), JapanFrequency: MonthlyPeriod Covered: Prior month Volatility: LowMarket significance: ModerateWeb site: http://www.meti.go.jp/english

What is it?Japan Industrial Production

Measures output changes for the industrial sector of the economy.Measures production, demand, and the equipment needed for production.Tool for forecasting future GDP and economic performance.Used by central banks to measure inflation.

Japan Industrial Production What is it in the report?4 Index’s:Industrial Production:

Value-added weight

Production-value weight

Producer’s Shipments:Reveals the state of transactions (factory shipments) at the level of the producer

Producer’s Inventory of Finished Goods:

Shows the state of product inventories remaining with the producer.

Producer’s Inventory Ratio of Finished Goods:

Provides direct view of supply & demand trends for products

Why is it important?

U.S. possess the largest and most self-sufficient economy in the world, thus, impervious to the ups and downs of foreign economic cycles.

Healthy domestic economic performance depends on how well other nations are doing.

Ranked 5th in the “Top Ten” Intl. Economic Indicators.

Japan Industrial Production

Why is it important? (cont.)Explain changes in GDP.

Highly sensitive to the business cycle and can often predict future changes in employment, earnings and personal income.

Describes to what extent various industries participating in the pace of economics growth changes.

Japan Industrial Production

Keys to Interpreting the Data

Be aware that a preliminary report is published in the final week of the month following the month being covered.Notice that a revised report is released two to three weeks later.Indus. Prod. is expressed as percentage of real output (adjusted for inflation) relative to a base year. Pay attention to percent change of the level from month to month and how it compares with the percent trend of the economy at that time.

Japan Industrial Production

Historical DataHistorical Data(Seasonally Adjusted)(Seasonally Adjusted)

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

Production/Inventory

Shipments

Inventory Ratio

Japan Industrial Production

Raw Data Obtained from METI Statistics

Recent Data Analysis I: Recent Data Analysis I: Changes in ProductionChanges in Production

Production has decreased in Production has decreased in March by 0.6% from the previous March by 0.6% from the previous month.month.

Industries contributed to the Industries contributed to the decrease are:decrease are: General machineryGeneral machinery Electrical machineryElectrical machinery Fabricated metalsFabricated metals

Japan Industrial Production

Recent Data Analysis I: Recent Data Analysis I: Changes in Production (cont.)Changes in Production (cont.)

Commodities Commodities contributed to contributed to the decrease are:the decrease are: Semiconductor Semiconductor

products products machinerymachinery

Cellular Cellular telephonestelephones

Reaction Reaction vesselsvessels

Japan Industrial Production

Recent Data Analysis II:Recent Data Analysis II:Production Forecast for Apr. & Production Forecast for Apr. &

MayMay According to the According to the

Survey of Production Survey of Production Forecast in Forecast in Manufacturing, Manufacturing, production is expected production is expected to increase by1.5% in to increase by1.5% in April and 1.4% in May.April and 1.4% in May.

Industries that will Industries that will contribute to the contribute to the increase in April are:increase in April are: General machineryGeneral machinery Electrical machineryElectrical machinery Non-ferrous metalsNon-ferrous metals

Japan Industrial Production

Recent Data Analysis II:Recent Data Analysis II:Production Forecast for Apr. & May Production Forecast for Apr. & May

(cont.)(cont.)

Industries that will Industries that will contribute to the contribute to the increase in May are:increase in May are: Electronic parts and Electronic parts and

devicesdevices Transport equipmentTransport equipment Information and Information and

communication communication electronics electronics equipmentequipment

Japan Industrial Production

Recent Data Analysis III:Recent Data Analysis III:Changes in ShipmentsChanges in Shipments

Shipments in March decreased Shipments in March decreased 1.5% from the previous month.1.5% from the previous month.

Industries contributed to the Industries contributed to the decrease are:decrease are: General machineryGeneral machinery Fabricated metalsFabricated metals Electrical machineryElectrical machinery

Japan Industrial Production

Recent Data Analysis IV:Recent Data Analysis IV:Changes in InventoryChanges in Inventory

Inventory in March Inventory in March decreased 0.5% from decreased 0.5% from the previous month. the previous month.

Industries contributed Industries contributed to the decrease are:to the decrease are: Transport Transport

equipmentequipment Electrical machineryElectrical machinery TextilesTextiles

Inventory ratio Inventory ratio increased 1.8% from increased 1.8% from previous month.previous month.

Japan Industrial Production

Recap of the Data AnalysisRecap of the Data Analysis

Industrial production is on a Industrial production is on a moderately upward trend.moderately upward trend.

Production, shipments & Production, shipments & inventory decreased.inventory decreased.

Inventory ratio increased.Inventory ratio increased.

Japan Industrial Production

Recap of the Data Analysis Recap of the Data Analysis (cont.)(cont.)

According to the Survey of According to the Survey of Production Forecast in Production Forecast in Manufacturing, production is Manufacturing, production is expected to increase in April & expected to increase in April & May.May.

Japan Industrial Production

Latest ReleaseNew Industrial Structure Report:

3 industrial groups

• Industries capable of surviving international competition such as the fuel cell industry and the digital consumer electronics industry

• Industries such as the health and welfare devices and services industry that meet market needs in keeping with social changes while at the same time creating jobs

• Industrial clusters for regional revitalization

Japan Industrial Production

Latest Release (cont.)

Industrial clusters for regional revitalization:

• Advanced high-tech industry• Development of new businesses in the

manufacturing industry• Innovation in regional service industries• High value-added food industry

Japan Industrial Production

This concludes our presentation.

Presentation completed by Amy Au & Eunice Au

For Econ 435

Professor Castillo