Japan: Industrial production likely surged by 2.5% in August - Nomura

Analysts at Nomura expect Japanese industrial production growth in August to have risen to 2.5% m-o-m. 

Key Quotes

“The survey of manufacturers' production forecasts called for strong month-on-month growth of 6.0% in August. However, we note that, since 2008, actual production growth in months when projected growth for the current month has been in the top 10% for the survey has been around 3.5pp lower than forecastl. The sectors expected to contribute to the sharp rise in August, such as general-purpose, production, business-oriented machinery and information and communication electronics equipment, often tend to fall short of production forecasts, and we believe the high growth forecast for production in August could well be affected by these sectors.”

“That said, related indicators for August were buoyant. First, Japan's real exports, which have a strong correlation to industrial production, rose by 3.1% m-o-m in August, gaining momentum from the preceding month. Furthermore, Japans manufacturing PMI stood at 52.5, up 0.9 points from July, above the expansion/contraction threshold of 50, while the current conditions DI for manufacturers in the Economy Watchers Survey (seasonally adjusted) was up 2.3 points from July.”

“Taking these indicators into account as well, we expect actual production for August to rise by 2.5% m-o-m.”