Japan and South Korea report slower industrial-output growth in July

  • Japan’s industrial production rose 4.1% year on year in July, while South Korea’s increased 3.6%.
  • Japan’s July growth slowed from 4.9% in June; South Korea’s followed a revised 5.8% June gain, with monthly output down 0.4%.
  • Japanese manufacturers faced weaker external demand, labor shortages and higher energy costs, while South Korean semiconductor and automobile production weakened.

Separate official data releases showed industrial production continued to grow in Japan and South Korea in July, but momentum slowed in both export-oriented manufacturing economies. Japan’s output increased 4.1% year on year, down from 4.9% in June and 3.3% in May, while South Korea’s rose 3.6%, easing from a revised 5.8% gain in June. Japan’s month-on-month output also softened, while South Korea’s seasonally adjusted production fell 0.4% after rising 0.5% in June. Japanese manufacturers face weaker global and Chinese demand, supply-chain adjustments, labor shortages and energy costs; South Korean output was weighed by declines in semiconductors and automobiles, including parts disruptions, while machinery and equipment remained more resilient. The readings point to gradual normalization or cooling momentum, although annual growth remained positive in both countries. The data could influence expectations for the Bank of Japan’s accommodative stance and the Bank of Korea’s interest-rate decisions, while affecting currencies, equities, investment, employment and regional supply chains.

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