By Tyler Durden
Authored by Jeffrey Snider via Alhambra Investment Partners,
Japanese industrial production dropped sharply in January 2018, Japan’s Ministry of Economy, Trade, and Industry reported last month. Seasonally-adjusted, the IP index fell 6.8% month-over-month from December 2017. Since the country has very little mining sector to speak of, and Japan’s IP doesn’t include utility output, this was entirely manufacturing in nature (99.79% of the IP index is derived from the manufacturing sector).
Various reasons were given for the decline, as they always are, but more importantly it placed a great deal of importance on the February estimate. Was January a one-time aberration, or is there a looming break in trend?
The Ministry released estimates late last week that suggest the break might be more than a one-month transitory anomaly. Industrial Production rebounded in February, but only by 4.1%. That left the year-over-year change (not seasonally-adjusted) as +1.4%. It’s the lowest gain since October 2016, down substantially from what increasingly looks like a mid-2017 peak (+6.5%).
Like so many other economic accounts around the world, Japan’s IP statistic is often misunderstood or disingenuously deployed to sound off on the prospects of a turning point for Japan’s economy.
It was that way at the beginning of Abenomics …read more