Thursday, strong increase in Japanese exports to Asia may be the reason behind the bullish producer forecasts, Tokyo-based BNP Paribas economist Hiroshi Shiraishi wrote in a note.
Official data showed earlier in the day that industrial output grew 1.4% month-on-month in September compared to the 1.6% increase in the previous month. Economists had expected output to rise by a more modest 1%.
September marked the seventh straight month of industrial production growth. In the ministry's survey of production forecast, production is expected to increase 3.1% on a monthly basis in October and 1.9% in November.
Previously, BNP Paribas had commented that the recovery in the Japanese manufacturing sector was being driven by temporary factors such as the inventory cycle, the fiscal measures in effect at home and abroad and pent-up demand generated due to a revision of excessive pessimism, the economist said.
But, with industrial output growth showing no signs of abating as yet, Shiraishi said the stronger-than-expected recoveries of the Asian economies could be propping up the Japanese manufacturing sector. Exports to Asia, and especially China, are on the rise again after showing signs of cooling in the summer.
"The Asian economies, centering on China, are recovering more strongly than we had anticipated," the economist wrote. "Many Asian countries enjoy exceptionally easy monetary environments, as stimulative policy measures have been combined with dollar intervention to counter fund flows from dollar carry trades."
These Asian economies are revealing robust recoveries in domestic demand and there are signs of possible asset price bubbles in some of them, the BNP Paribas economist said. "The likelihood that these strong recoveries will continue is growing."
However, Shiraishi pointed out that conditions in the domestic front appear far from encouraging for Japanese manufacturers, with overall output still only at about 80% of its past peak. Moreover, cuts in the public works by the new government is also likely to dampen industrial output growth in the short term. In all, the economist said the outlook for the industrial sector had not changed a great deal, with the robustness of external demand being canceled out by dull domestic conditions.
"Nevertheless, investors should note that upside risk for the manufacturing sector in the short term is mounting because it is strongly affected by external demand," Shiraishi said.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.