Japan’s industrial production falls 1.2% in July amid trade uncertainty; Japan and U.S. reaffirm G7 currency policy

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Japan's industrial production declined by 1.2% month-over-month in July, a slight improvement from the preliminary forecast of a 1.6% drop. The decline, which reverses a 2.1% gain from the previous month, marks the steepest drop since November 2024.

The report cited several factors for the decline, including uncertainty in U.S. trade, a general softness in demand, and continued weakness in key sectors such as the auto and steel industries.

On a yearly basis, industrial output contracted 0.4%, swinging from a 4.4% rise in June.

Separately, the U.S. and Japan renewed their G7 commitments on currency policy, stressing that exchange rates should remain market-driven, according to a joint statement.

The Nikkei 225 Index [https://seekingalpha.com/symbol/NKY:IND#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews] rose 0.7% to around 44,700 and the Topix gained 0.5% to 3,165 on Friday, with Japanese equities hitting fresh record highs. The Japanese yen [https://seekingalpha.com/symbol/USD:JPY#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews] weakened to around 147.4 per dollar on Friday, giving up the prior session’s gains, after the US and Japan issued a joint statement reiterating that exchange rates should remain market-driven and that excessive volatility is undesirable.

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