Japan’s industrial production rose 1.4% mom in October, sharply beating expectations of a -0.6% decline. The rebound was driven primarily by a 6.6% jump in motor vehicle output, a sector benefiting from the U.S. tariff rate on Japanese cars being reduced to 15% from 27.5% in mid-September. The improvement highlights how quickly Japanese automakers responded once tariff uncertainty eased.
However, the forward outlook remains soft. Based on its manufacturer survey, METI expects output to fall -1.2% in November and contract a further -2.0% in December. Despite October’s upside surprise, the ministry kept its overall assessment unchanged, saying industrial production “fluctuates indecisively” amid continued uncertainty at home and abroad.
Retail sales also surprised to the upside, rising 1.7% yoy versus expectations of 0.8%. The strength suggests domestic demand remains more resilient than many feared, even as the industrial sector continues to face uneven momentum.
