Japanese industrial production dropped sharply in February
Japanese industrial production registered an unexpectedly sharp drop last month, even when earlier-than-usual regional holidays were factored in.
Output from the country’s factories and mines fell by 3.4% month-on-month in February, the Trade Ministry in Tokyo said.
That was twice the 1.7% slump which analysts had pencilled in and followed a 3.7% decline the previous month.
This year the Lunar New Year holidays fell in February, as opposed to January in 2014, which may have weighed on demand for Japanese goods.
Acting as a backdrop, over the weekend China’s central bank governor Zhou Xiaochuan hinted at a further loosening of monetary policy. Zhou stressed that they must be vigilant on inflation which has been declining and could well enter deflationary territory.
“While Zhou did recently warn that a too accommodative stance could undermine structural reforms, his latest comments clearly suggest that a bigger concern is the inflation trend and therefore I don’t expect them to hold back,” wrote Oanda Senior Market Analyst Craig Erlam.