[News] Nearly 80% of Japan’s Industrial Sectors Output Declines, Threatening to Weigh on Q3 Economic Growth

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Japan’s industrial production declined in August, according to data released by Japan’s Ministry of Economy, Trade and Industry (METI) on October 15. Industrial production in August fell by 4.9% year-over-year, a 6% drop compared to the previous month.

On a month-over-month basis, industrial production decreased by 3.3% in August, down 6.4% from the prior month, and below the market expectation of -0.5%.

By sector, approximately 80% of industries saw a decline in output. The automotive industry, in particular, saw a monthly drop of 10.7% (previously 1.9%) and an annual decrease of 15.4% (previously 2.0%), reflecting the impact of halted production due to data falsification by automakers and weak overseas car sales.

Meanwhile, machinery production fell by 7.8% month-over-month (previously -4.6%) and by 7.8% year-over-year (previously 0.9%), driven by weakening overseas demand.

METI forecasts industrial production to increase by 2.0% in September and by 6.1% in October. However, even if production rises as expected in September, third-quarter output may still be lower than in the second quarter.

Industrial production accounts for approximately 40% of Japan’s GDP. With uncertainty in domestic demand from both the U.S. and China, coupled with the potential end of the global manufacturing growth cycle, Japan’s export and production outlook remains uncertain, adding further pressure on its economic growth.