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Japanese Industrial Production Falls Short of Expectations; Government says Economic Outlook Remains Positive

Japanese Industrial Production Falls Short of Expectations; Government says Economic Outlook Remains Positive

2011-05-31 00:24:00
David Liu, DailyFX Research,
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New Japanese economic data for April released by the Japanese Statistics Bureau confirmed a still-struggling domestic economy after the March Sendai Earthquake. Although labor and consumption data, though failing to beat expectations, showed a welcomed improvement from the previous monthly data, a languishing manufacturing and industrial sector may prompt further central bank and government actions.

EVENT

ACT

EXP

PREV

Overall Household Spending YoY (APR)

-3.0%

-2.7%

-8.5%

Jobless Rate (APR)

4.7%

4.7%

4.6%

Job-to-Applicant Ratio (APR)

0.61

0.62

0.63

Industrial Production MoM (APR P)

1.0%

2.0%

-15.5%

Industrial Production YoY (APR P)

-14.0%

-12.4%

-13.1%

Despite the declining preliminary April data due to a decline in shipments and production, an encouraging inventory ratio, increasing 4.1% from its three-month moving average suggests higher expectations for new domestic and overseas orders. The Statistics Bureau also reported an expected May industrial production rise of 8% month-over-month and June manufacturing advance of 7.7% MoM.

Although the Yen rallied against the dollar in early morning trading due to general USD weakness, action for the pair was relatively muted after the data release as investors weigh the significance of a weaker Japanese economy but also higher production expectations in the summer months. Japanese Chief Cabinet Secretary Yosano in a statement shortly before the industrial data release also confirmed that ruling parties agreed to issue bonds for reconstruction. Furthermore, traders may be framing this unexpected fall as a prompt for further Bank of Japan easing or government recovery money.

Japanese_Industrial_Production_Fall_Short_of_Expectations_body_Picture_3.png, Japanese Industrial Production Falls Short of Expectations; Government says Economic Outlook Remains Positive

USDJPY 5 Minute Graph; white arrow indicates data release. Chart generated with FXCM Strategy Trader.

At the time of report, the benchmark Nikkei 225 was up 0.49% at 9552, led by oil and gas at +0.65% and telecommunications at +0.48%.

Written by David Liu, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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