Japan Industrial Output: Updated June 5, 2025.

Japan's April industrial output falls 0.9%, 1st drop in 3 months

Article source:  https://mainichi.jp/english/articles/20250530/p2g/00m/0bu/024000c

Ideas

Japan's industrial output index is very important for the Japanese economy has Japan is focused on manufacturing and exporting more than other countries.

Manufacturing and exports have become major economic drivers even more than consumer spending or company investments, as the Japanese domestic economy is somewhat stagnant these days.

An index reading of 101.5 might sound good which it is but for Japan it should be a little better to help with economic growth.

While others countries focus more on services and technology, Japan seems to still focus on industry and manufacturing to keep its economy moving forward.

And yes, the Japanese economy, like all advanced economies these days is very much a services and technology, but also Japan is heavily focused on industry and manufacturing

Revisions on data is always being revised as more data becomes available and or as revisions are needed due miscalculations in in the data. That doesn't mean there was anything bad with the data as all data gets revised sometimes many times over the course of a year.

Japan recently has become a major pharmaceutical products producer and pharmaceuticals have become a major export product for Japan.

While Japan is always focused on industrial production, at the same time, it's sometimes not very stable due to the fact that Japan exports a lot globally and demand can fluctuate indecisively a lot.

While industrial production has been a more economic driver of the Japanese economy, and many products are global leaders or used to be global leaders, the global landscape has changed with South Korea and China now having more global leader products than Japan now.

The US tariff situation has not really affected Japan yet, as many companies in the US that sell Japanese products still have a two or three months supply of products which are not affected by the tariffs. 

The US tariffs, sometime this summer, might begin to have an affect as then US companies will increase their prices and US consumers will think twice about buying Japanese products if some kind of trade deal is not reached.

An economy with many different sectors doesn't always see all sectors grow equally each month or each quarter as some will increase and some will decrease, depending on demand from global customers and customers in Japan too.

A one month drop in one sector doesn't mean much as there could be many reasons for the drop besides decreased demand for a product. Many times companies will keep producing a product despite information that demand is down and they have already committed to producing a specific amount for that month.

Again, an economy and all of the various sectors in an economy doesn't increase or decrease exactly the same, as demand for products might cause a sector to see decreased. And at the same time there might be supply chain challenges which could slow down production which happened a lot during the pandemic.

So again, just because demand might be less than expected, there could be many reasons for the slow-down in production, including breakdowns in equipment, low raw materials needed and so on.

Some might say production and industry are the backbone of an economy and yes, that is probably true and especially for Japan. But at the same time an economy needs a strong consumer spending sector, which at this time it seems to be far behind the other advanced economies in the world.

Consumer spending in Japan is only about 50 percent of its GDP while in the US is maybe 65 percent of its GDP, which is why the US is a strong consumer economy and Japan is still not there yet.

Manufacturing output, again, is very important for Japan has its needs a strong manufacturing sector due to the fact that its domestic consumer spending sector seems to still be stagnant at this time.

However, with a record number of foreign tourists entering Japan, and the Japanese yen is relatively weak foreign tourists have more purchasing power and foreign tourist spending might help, but it will never makeup for the less than stagnant consumer spending situation in Japan.

Have a nice day!