–METI Survey: Output Likely to Post Modest Gains in February, March; Not Strong Enough to Offset January Dip
–METI Keeps View After Recent Downgrade: Output Has Weakened
–METI Repeats: To Watch Effects of a Rise in Covid Cases, Parts Shortages, Inflation
By Max Sato
(MaceNews) – Japan’s industrial production slumped at a faster pace than forecast in January after December’s upwardly revised slight gain, as automakers suffered parts shortages and many other industries were hit by weaker global and domestic demand, preliminary data released Tuesday by the Ministry of Economy, Trade and Industry showed.
The decline in output reflects weaker exports in January on slowing global demand and suspended shipments during the Lunar New Year holidays in some parts of Asia. The Bank of Japan’s real export index fell a seasonally adjusted 2.9% on the month in January for the second straight decline after slipping 4.5% in December.
The METI’s survey of producers indicated that output is likely to post modest gains in February and March, but the ministry said that would not be strong enough to offset the sharp drop in January.
The ministry maintained its view after downgrading it recently, saying industrial output “has weakened.” Previously, it had said, production was “picking up gradually but also showing weakness in some areas.” The METI repeated that it will keep a close watch on the impact of a rise in 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 slumped a seasonally adjusted 4.6% on the month in January, coming in much weaker than the median economist forecast of a 3.0% fall (forecasts ranged from 4.2% to 1.3% drops). It followed a 0.3% rise (revised up from an initial 0.1% dip), a 0.2% rebound in November and a 3.2% slump in October. The 9.2% surge in June 2022 was due to the reopening of Shanghai after two months of a Covid lockdown of the port city, which supported the regional supply chain.
- Of the 15 industries, 12 posted decreases and three recorded increases from the previous month. Leading the decline were autos (passenger cars, engines) amid parts supply shortages. Output of production machinery also fell as makers of semiconductor-producing equipment faced slower global and domestic demand and parts shortages hit production of excavators.
- Based on its survey of manufacturers, METI projected that industrial production would rise 8.0% on the month in February (revised up from a 4.1% rise forecast last month) and edge up 0.7% in March. Adjusting the upward bias in output plans, however, METI forecast production would rise a modest 1.3% in February.
- The index of industrial production (100 in the 2015 base year) stood at 91.4 in January, falling to an eight-month low. It is 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. The index briefly jumped to 100.2 in August 2022.
- 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 2021. Output was flat in calendar 2022, down 0.1%, after rising 5.6% in 2021 and plunging 10.4% in 2020.
- From a year earlier, the production index slipped 2.3% in January, marking the third straight drop after sliding 2.4% (revised up from a 2.8% drop) in December, falling 0.9% in November and rising 3.0% in October. It was weaker than the median economist forecast of a 0.4% fall (forecasts ranged from a 1.4% drop to a 1.0% gain). Production showed double-digit percentage gains on year from April to July 2021 in reaction to the pandemic-caused slump the previous year.
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Contact this reporter: max@macenews.com
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