Japan: Industrial output rebounds in February
Latest reading: Industrial production rose 2.3% month on month in seasonally adjusted terms in February (January: -1.1% mom). February’s print marked the best reading since March 2024 and followed three consecutive months of decline; the threat of Trump’s tariffs on autos pushed manufacturers to rush out units. Looking at the details of the release, there were rebounds in the output of production machinery, electronic parts and devices plus pulp, paper and paper products.
On an annual basis, industrial output increased 0.3% in February, which was below January’s 2.2% expansion. Meanwhile, the trend improved modestly, with the annual average variation of industrial production coming in at minus 2.1% in February, up from January’s minus 2.4%.
Outlook: After shrinking for the third consecutive year in 2024, industrial production should rebound in 2025, but is likely to remain below 2021 levels. Since the start of the year, our panelists have cut their forecasts by 0.9 percentage points, with rising U.S. tariffs expected to hit external demand for Japanese manufactured goods. A possible Japan-U.S. trade deal poses an upside risk.