Japan's industrial output falls 1.7% in August, led by cars and machinery, but makers expect a rebound

Japan's Ministry of Economy, Trade and Industry (METI) published its preliminary index of industrial production for August at 8:50 a.m. Tokyo time on 30 September 2026. The seasonally adjusted index fell 1.7% from July to 102.6 (2020 = 100). METI's own summary describes industrial production as fluctuating indecisively.

The figures

• Production: 102.6, −1.7% on the month; the unadjusted index was 3.4% above a year earlier
• Shipments: 100.8, −2.5% on the month, +1.9% on the year
• Inventories: 97.6, −0.5%, and 1.9% lower than a year earlier
• Inventory ratio: 106.3, up 1.7% on the month and down 1.9% on the year

METI names motor vehicles, general-purpose and business-oriented machinery, and petroleum and coal products as the industries that contributed most to the fall in production. Production machinery, transport equipment (excluding motor vehicles) and chemicals contributed most to increases. For shipments, motor vehicles were again the largest drag.

What manufacturers expect

METI's monthly Survey of Production Forecast in Manufacturing asks firms about planned output. The September survey points to production rising 3.2% in September and 3.1% in October. In the August survey, manufacturers had expected September output to fall 4.2%, so the plan has turned sharply upward. These are intentions, not forecasts by METI, and companies' plans are often revised.

What it means for the yen

Industrial production matters less to the yen than inflation or the Bank of Japan, but a weaker factory sector complicates the Bank's path. It raised its policy rate to 1.25% on a 7–2 vote on 18 September (report), and its board is split on how fast to go next (report). Tokyo core inflation reached 2.7% in September (report). The Bank meets again on 29–30 October. How to trade USD/JPY covers the other forces on the pair. Live prices: USD/JPY.