Deep Dive:Industrial Production,A return to growth

Event

October seasonally adjusted industrial production data was released: 0.3% YoY.

Impact

With support from the inflected OECD LI and global industrial recovery, Japan’sindustrial production activity index is positive for more than three consecutivemonths since August 2016, 1.1% YoY, for the first time since July 2014.

Domestic demand growth can be a second driver for the domestic recovery andwe believe private investment is the key for this to happen.

Improvement in industrial production would support the increase in operatingratio and capital utilisation, which could possibly lead to the return of a positivecapex cycle.