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27 Jan 2016
JPY: Industrial production likely dipped 0.9% in December - Nomura
FXStreet (Delhi) – Yoshiyuki Suimon, Research Analyst at Nomura, expects Japanese December 2015 industrial production index to be down 0.9% m-m.
Key Quotes
“However, we think it will be up 0.9% q-q for 2015 Q4 a whole, in a rebound from the 1.2% q-q decline in Q3. According to the survey of production forecasts, manufacturers expected output to grow 0.9% m-m in December.
The December Japan manufacturing PMI output index came in at 53.9, above the 50 threshold between economic expansion and contraction, but the correlation of this index with production is not high on an m-m basis. Moreover, we estimate that real exports grew 0.1% m-m in December, slower than the 3.0% increase in November, and think that exports are unlikely to have boosted production in December.
Actual industrial production index figures tend on average to be almost 2% below forecasts in the previous month's survey. In view of the factors set out above, we expect to see a 0.9% m-m drop in production in December, which would result in a roughly average realization ratio.
The consensus forecast of a 0.3% m-m decline is slightly higher than our forecast. However, we think production activity may have slowed because we are expecting a sharp decline in December in electric power sales to large-lot users in the mining and manufacturing industries, which are closely correlated with industrial production.
In addition, bearing in mind historical average revision rates, we expect the December forecast of 0.9% m-m growth to be revised down to below the consensus forecast. In particular, in view of recent revision patterns, we expect a sharp downward revision for information and communication electronics equipment, production forecasts for which have been for notably rapid growth.”
Key Quotes
“However, we think it will be up 0.9% q-q for 2015 Q4 a whole, in a rebound from the 1.2% q-q decline in Q3. According to the survey of production forecasts, manufacturers expected output to grow 0.9% m-m in December.
The December Japan manufacturing PMI output index came in at 53.9, above the 50 threshold between economic expansion and contraction, but the correlation of this index with production is not high on an m-m basis. Moreover, we estimate that real exports grew 0.1% m-m in December, slower than the 3.0% increase in November, and think that exports are unlikely to have boosted production in December.
Actual industrial production index figures tend on average to be almost 2% below forecasts in the previous month's survey. In view of the factors set out above, we expect to see a 0.9% m-m drop in production in December, which would result in a roughly average realization ratio.
The consensus forecast of a 0.3% m-m decline is slightly higher than our forecast. However, we think production activity may have slowed because we are expecting a sharp decline in December in electric power sales to large-lot users in the mining and manufacturing industries, which are closely correlated with industrial production.
In addition, bearing in mind historical average revision rates, we expect the December forecast of 0.9% m-m growth to be revised down to below the consensus forecast. In particular, in view of recent revision patterns, we expect a sharp downward revision for information and communication electronics equipment, production forecasts for which have been for notably rapid growth.”