EWJV - Japan: Auto Sector Hampers Overall Industrial Production In June

2024-07-31 02:12:00 ET

Summary

• Industrial production plummeted as auto safety scandals resurfaced and we will revise down our GDP outlook for 2024 quite sharply.
• However, the continued rise in retail sales points to a recovery in consumption.
• We believe the BoJ will focus more on the virtuous cycle between the strength in consumption and wage growth.

By Min Joo Kang

Industrial production fell across almost all industries

Industrial production ((IP)) dropped -3.6% MoM sa in June (vs 3.6% in May, -4.5% market consensus), offsetting the gain in the previous month. In the first half of this year, industrial production data showed large month-on-month fluctuations due to the auto safety scandal. Some automotive production lines have been shut down since June, and this is expected to continue in August. The disruption will hamper the recovery in manufacturing production for the time being....

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