–Output Posts Larger-than-Expected M/M Drop, 1st Y/Y Fall in 7 Months
–METI Keeps View After Downgrade Last Month: Factory Output Pausing
–METI Repeats: Watch Effects of Rising COVID Cases, Global Chip Shortages
By Max Sato
(MaceNews) – Japan’s industrial production posted the third straight monthly decline in September, coming in weaker than expected, as protracted global semiconductor shortages and pandemic-caused delays in parts supply from Southeast Asia continued affecting automakers and other sectors, preliminary data released Friday by the Ministry of Economy, Trade and Industry showed.
The ministry maintained its assessment that factory output is “pausing” after downgrading it last month from its previous assessment that it was “picking up.” It also repeated its warning about downside risks to domestic and global economic growth posed by the spread of more contagious coronavirus variants and chip shortages.
The key points from the data:
- Industrial production slumped a seasonally adjusted 5.4% from the previous month in September, coming in much weaker than the median economist forecast of a 3.2% drop. It was the third straight decrease after a revised 3.6% drop in August.
- The decrease was led by lower production of passenger cars, engines, conveyors, compressors, plastics and chip-making equipment.
- Production fell on the month between February and May last year, with steep declines of -10.3% in April and -10.5% in May during the first wave of the pandemic and rose between June and November, with a sharp 6.0% rebound in July.
- The index of industrial production (100 in the 2015 base year) stood at 89.5 in September, falling to the lowest level since August 2020. It was still above the recent bottom of 77.2 hit in May 2020 but below 99.1 seen in January 2020, when the pandemic hadn’t had a widespread impact yet.
- From a year earlier, the index dipped 2.3% in September, marking the first drop in seven months after rising 8.8% in August, 11.6% in July and 23.0% in June. The previous gains were in reaction to the pandemic-depressed activity in the summer of 2020.
- Based on its survey of manufacturers, METI projected that industrial production would rise 6.4% on month in October (revised down slightly from a 6.8% rise forecast last month) and gain a further 5.7% in November. Adjusting the upward bias in output plans, METI forecast production would rise 2.4% in October.
- In September, shipments plunged 6.2% on month, the third straight drop after falling 4.4% the previous month, as supply chain disruptions delayed shipments of automobiles and laptop computers. Those of lithium-ion batteries also dropped due to slower exports.
- Inventories marked the first rise in three months, up 3.7% on month after falling 0.1% in August, led by the electric and information technology industries that built up inventories in the face of slower shipments.
Supply Chain Constraints Hit Output, Exports
Earlier this month, the government maintained its cautious view on the pace of domestic economic recovery in its monthly report as global supply chain disruptions lingered, noting export growth was slowing.
The government downgraded its view on exports for the first time in seven months, saying they were “increasing at a slower pace.” In its previous statement, it said exports showed “a continued increase at a slow pace.”
It maintained its assessment that production was “picking up, although some weakness is seen.” Last month, it downgraded its view on factory output for the first time in 17 months.
Last month, the Bank of Japan also noted that supply chain disruptions were “affecting some Japanese exports and factory output,” but also maintained its view that they are still “increasing.”
The BOJ’s real export index slumped a seasonally adjusted 6.5% on month in September, the second straight drop (-3.7% in August, +1.4% in July). In the July-September quarter, the index dipped 2.8% on quarter after rising 3.4% in April-June for the first drop in five quarters.
Contact this reporter” max@macenews.com
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