Japan November Factory Output Surges on Further Easing in Supply Bottlenecks

— METI Upgrades View: Factory Output Shows ‘Signs of Pickup’ Vs. ‘Pausing’

— METI Warns of Uncertainty Caused by Pandemic, Materials Shortages

By Max Sato

(MaceNews) – Japan’s industrial production posted the second straight monthly rise in November, at a rate higher than forecast, as supply chain disruptions eased further to help carmakers recover some lost output, preliminary data released Tuesday by the Ministry of Economy, Trade and Industry showed.

The ministry upgraded its assessment, saying output is “showing signs of a pickup.” Previously, it said factory output was “pausing” after a downgrade in September. It warned about uncertainty over domestic and global economic growth caused by the spread of coronavirus infections and materials shortages. 

The key points from the data:

* Industrial production jumped a seasonally adjusted 7.2% from the previous month in November, coming in stronger than the median economist forecast of a 4.8% rise and marking the largest gain under the current 2015 base year. It was the second straight increase following a 1.8% gain (revised up from an initial 1.1% rise) in October and a 5.4% slump in September.

* The increase was led by higher production of passenger cars and auto parts as well as plastics for automobiles and plastic film and sheets for food packaging.

* Production fell on the month between February and May 2020, 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. In 2021, declines were seen in five of the first 11 months.

* The index of industrial production (100 in the 2015 base year) stood at a four-month high of 97.7 in November. It was 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 rebounded 5.4% in November after falling 4.1% (revised up from a 4.7% drop) in October and sliding 2.3% in September, which was the first drop in seven months. 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 1.6% on month in December (revised down from a 2.1% rise forecast last month) and gain 5.0% in January. But adjusting the upward bias in output plans, METI forecast production would dip 1.3% in December.

* Shipments surged 7.4% on month in November, the second straight rise after rising a revised 2.4% the previous month. Alleviated supply chain bottlenecks supported the auto industry. Among general and business equipment makers, shipments of conveyers rose on higher demand from delivery firms and warehouses while those of water tube boilers gained for exports.       

* Inventories marked the third straight increase, up 1.7% on the month after rising a revised 0.6% in October. Automakers raised production, allowing them to raise inventories from very low levels.