By Max Sato
(MaceNews) – Japan’s industrial production marked time in November in its gradual recovery from the pandemic-caused slump after five straight monthly gains, with the level of output staying under year-earlier levels amid uncertainty over global growth, preliminary data released Monday by the Ministry of Economy, Trade and Industry showed.
While noting factory output is still on a recovery track, the ministry warned that rising coronavirus cases around the world continue posing downside risks to domestic and global economic activity.
The key points from the data:
* Industrial production was unchanged from the previous month in November, coming in weaker than the consensus economist forecast of +1.2%. Higher production of semiconductor-making equipment, general machinery (turbines, boilers), and steel and other metal products was offset by lower output of passenger cars, chemicals, and plastic products. “The auto industry, which had led higher production until the previous month, posted the first drop in six months, but recovery is continuing in many of the lagging industries,” METI said.
* The flat result followed five months of increases, with September output revised up to +4.0% from a preliminary +3.8%. Production fell m/m between February and May, with a steep 9.8% decline in April.
* The Index of Industrial Production (100 in the 2015 base year) was unchanged at 95.2 in November after rising from a recent bottom of 78.7 in May, but it was still below 99.8 in January, when reported coronavirus cases were limited. “The level of production is still low, and so we hope to see it recover further,” the ministry said in a statement, largely repeating its recent assessment.
* From a year earlier, IIP dipped 3.4% in November for the 14th straight year-on-year drop, with the pace of decrease accelerating slightly from -3.0% (revised up from -3.2%) in October. The decline was smaller than -9.0% in September and -13.8% in August.
* Based on its survey of manufacturers, METI projected that industrial production would slip 1.1% on month in December (revised up from -2.4% forecast last month) but rebound 7.1% in January. Adjusting the upward bias in output plans, METI forecast production would fall a faster pace of 2.3% on month in December.
* METI maintained its assessment, saying, “Production is picking up.” The ministry urged a close watch on “downside risks to domestic and overseas economic growth posed by the recent spread of infections.”
* In November, shipments fell 0.9% on month, the first m/m drop in six months led by the auto industry after rising 4.9% the previous month, while inventories posted the eighth consecutive monthly decline. This indicates the recent pickup from the plunge in economic activity seen earlier this year has lost some steam.
Govt sees pickup amid pandemic uncertainty
“Shipments of many categories that had led the recovery since June, such as durable goods and production goods, fell in November, but shipments of capital goods (excluding transport equipment) used for business investment gained for the third straight month, showing signs of recovery in capital investment at home and abroad,” METI said.
Japan’s government Tuesday warned that consumer spending, which accounts for over half of domestic output, is showing soft spots despite its overall improvement from the pandemic-caused slump, according to its monthly report for December released by the Cabinet Office.
While noting increasing export volumes, particularly of automobiles and semiconductor-producing equipment, the government also downgraded its assessment of leading European economies for the second consecutive month.
The government maintained its cautiously optimistic view that both domestic and global economies are “showing signs of a pickup,” a statement unchanged since July when it revised up its overview.