–METI Survey Points to Possible Dip in August Output, Small Gain in September
–METI Keeps View: Output Making One Step Forward, One Step Back
–METI: To Watch Effects of Rising Covid Cases, Parts Shortages, Inflation
By Max Sato
(MaceNews) – Japan’s industrial production posted a slight gain in July in light of easing supply constraints for automakers, following a sharp rebound in June thanks to China’s lifting Covid lockdown of Shanghai, preliminary data released Wednesday by the Ministry of Economy, Trade and Industry showed.
The METI’s survey of producers indicate that output will lose some steam in August, possibly down slightly, as rain storms forced some factories to reduce operations and more employees contracted the Omicron virus, failing to report to work. The official forecast for September is for a slight rise.
The ministry maintained its view after upgrading it last month, saying industrial output is “making one step forward and one step back.” Previously, it had said output was “weakening.” The METI repeated its recent statement that it will keep a close watch on the impact of rising Covid cases on domestic and global growth as well as parts and materials supply shortages and rising prices.
The key points from the data:
- Industrial production rose a seasonally adjusted 1.0% on the month in July, coming in firmer than the median economist forecast of a 0.5% fall (forecasts ranged from a 1.6% drop to a 2.0% rise). It followed a revised 9.2% surge in June and a 7.5% plunge in May.
- Of the 15 industries, only six posted increases, eight recorded declines and one showed no change from the previous month. Higher output of passenger cars and auto parts offset lower production of electronic parts and devices amid slower demand for semiconductors.
- Based on its survey of manufacturers, METI projected that industrial production would rise 5.5% on the month in August (revised down from a 6.0% rise forecast last month) and edge up 0.8% in September. Adjusting the upward bias in output plans, METI forecast production would fall 0.6% in August.
- The index of industrial production (100 in the 2015 base year) rose to 97.1 in July. It is above the recent bottom of 77.2 hit in May 2020 but well below 99.1 seen in January 2020, when the pandemic hadn’t had a widespread impact yet.
- Production fell during the first wave of the pandemic in 2020. After a pickup later that year, more waves of infections caused logistical bottlenecks amid reopening demand and prompted parts supply delays from Southeast Asia, where lockdowns hit factory operations in August 2021. Later, easing supply bottlenecks pushed up production from October to December last year but the two-month lockdown of Shanghai, the shipment hub, hit many industries in April and May this year.
- From a year earlier, the production index fell 1.8% in July, marking the fifth straight drop, but the pace of decline continued decelerating from a revised 2.8% in June, 3.1% in May and 4.9% in April. It was smaller than the median economist forecast of a 2.4% drop (forecasts ranged from decreases of 4.3% to 0.8%). Production showed double-digit percentage year-on-year gains from April to July 2021 in reaction to the pandemic-depressed activity the previous year.
- Shipments posted the second straight rise, up 1.6% on the month in July, after rising a revised 5.0% in June, falling 4.1% in May and dipping 0.3% in April. It reflects higher output of passenger cars and truck, thanks to easing supply bottlenecks, which also supported shipments of other capital goods and durable goods.
- Inventories were unchanged in July after rebounding a revised 1.9% in June and falling 0.9% in May and slipping 2.3% in April. Easing parts shortages prompted production machinery makers to raise both output and inventories. By contrast, automakers used inventories to meet delivery demand.
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Contact this reporter: max@macenews.com
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