Industrial production growth in Japan likely to strengthen in 2015: Societe Generale

Quotes from Societe Generale Cross Asset Research:

-We expect January industrial production to grow by 3.9% mom in January. This is the second month of consecutive growth after +0.8% mom in December. As demand was weak following the CT hike in April, producers had adjusted inventories, and the positive effect of yen depreciation on export volume was not clear.

-However, year-end sales were firm and the recovery in export volume is now clear. Inventory adjustment is over, and there are some signs of recovery in production. Moreover, production goods especially in the semi-conductor sector are increasing, and this is often a leading indicator of overall industrial production. 

-In the "Monthly report of recent economic and financial developments" published in February,the assessment on production was revised up, indicating that "production is recovering" upfrom "production has bottomed out." The Survey of Production Forecast indicates a very strong recovery in production to a 6.3% mom rise in January, reflecting producers' optimistic outlook after adjusting inventories.

-The production trend for 2015 depends on how strongly exports can recover thanks to the US economic recovery. Assuming that US economic growth is above 3% in 2015 and that domestic demand is firm on the back of expanding aggregate wages, we expect the production trend to strengthen.