Japan: A positive trend in industrial production - ING

A positive trend in Japanese industrial production persists albeit it was a weak print in July and as a result it seems that BoJ Governor Kuroda has little option but to keep QQE running, according to Rob Carnell, Chief Economist at ING.

Key Quotes

“Japan’s industrial production was worse than the consensus forecast, falling 0.8% MoM, but still delivering 4.7% YoY growth. We had felt that the number could be even more negative, and view this data-miss as little more than an overoptimistic consensus getting it wrong. The underlying annual growth rate is still pretty respectable, and drawing a trend line through the month on month data swings takes a lot of courage and a very fat pencil. We do not view this as a significant data disappointment.”

“In terms of policy implications, with BoJ Governor Kuroda sceptical that current reasonable growth is sustainable, there is little in this data to suggest any reason for the BoJ to re-asses its current QQE policy, especially while the other two prongs of Abenomics, fiscal policy and structural reforms, are not currently providing much assistance.”