FX.co ★ Japan Industrial Output Shrinks More than Initially Thought

In August 2025, Japan's industrial output experienced a more pronounced contraction of 1.5% month-over-month, surpassing the preliminary estimate of a 1.2% decrease, which mirrored the decline recorded in July. This marked the second consecutive month of decline and the most rapid decrease since November 2024, driven by uncertainties in U.S. trade policies, muted demand, and ongoing challenges in critical sectors like automotive and steel production. Key industries contributing significantly to this downturn included electrical machinery, which plunged by 4.9% compared to a 1.2% fall in July, information and communication electronics equipment, fabricated metals with a steep decline of 16.5% compared to a 15.0% drop previously, and inorganic and organic chemicals, which fell by 5.4% versus a 2.5% decrease. On an annual scale, industrial production decreased by 1.6%, a noticeable acceleration from the 0.4% drop seen in July, marking the second consecutive month of year-over-year decline.