Japan’s industrial production declined -0.5% mom in March, falling short of expectations for a 1.1% increase. The drop was broad-based, with output declining in 8 of 15 sectors.
The downturn was led by petroleum-related products, where output of polyethylene plunged 27% and polypropylene fell 15%. Domestic fuel production also weakened sharply, with gasoline down 7.3% and diesel falling 14.3%. The scale of the decline likely reflects supply disruptions and input constraints linked to the effective closure of the Strait of Hormuz, which has tightened the flow of crude and refined products into the region.
Despite the weak headline figure, the Ministry of Economy, Trade and Industry maintained its assessment that production “fluctuates indecisively.” Forward-looking indicators offer some support, with manufacturers expecting output to rebound by 2.1% in April and 2.2% in May, led by machinery, electronic components, and transportation equipment.
On the demand side, retail sales provided a positive offset, rising 1.7% yoy after a 0.1% decline in February and beating expectations of 0.8%. The rebound suggests that consumption remains resilient.
| Indicator | Latest | Notes |
|---|---|---|
| Industrial Production (MoM) | -0.5% | Miss vs +1.1% expected |
Sector Breakdown (Industrial Production)
| Sector / Item | Change |
|---|---|
| Polyethylene | -27% |
| Polypropylene | -15% |
| Gasoline Output | -7.3% |
| Diesel Output | -14.3% |
| Sectors Declining | 8 / 15 |
Forward Guidance (METI Survey)
| Month | Expected Output Change |
|---|---|
| April | +2.1% |
| May | +2.2% |
