— Japan’s METI Keeps View Output Picking Up Despite Fluctuations
By Max Sato
(MaceNews) – Japan’s industrial production marked the second straight rise in April, recovering to the pre-pandemic level, as solid demand for capital investment in chip-making equipment among others more than offset automobile output cutbacks caused by global semiconductor shortages, data released Monday by the Ministry of Economy, Trade and Industry showed.
The ministry maintained its view that factory output is “picking up” amid a recovery in business investment in equipment as well as an increase in information technology demand.
But METI also repeated its warning about downside risks to domestic and global economic growth posed by lingering semiconductor shortages and a resurgence of coronavirus infections.
The key points from the data:
* Industrial production rose a seasonally adjusted 2.5% from the previous month in April, compared with the median economist forecast of a 4.1% rise. It was the second consecutive m/m gain after a 1.7% increase.
* The increase in April was led by higher production of general machinery, lithium-ion batteries and semiconductor-producing equipment.
* Production fell m/m 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 it rose between June and November, with a 6.0% rebound in July.
* The Index of Industrial Production (100 in the 2015 base year) was at 99.6 in April. It was well above the recent bottom of 77.2 in May 2020 and now above 99.1 seen in January 2020, when the pandemic hadn’t had a widespread impact yet. The index is at the highest level since September 2019 (102.4), a month before the sales tax was hiked to 10% from 8%.
* From a year earlier, IIP surged 15.4% in April after rising 3.4% in March, which was the first year-on-year rise in 18 months.
* Based on its survey of manufacturers, METI projected that industrial production would dip 1.7% on month in May (revised up from -4.3% forecast last month) and rebound 5.0% in June. Adjusting the upward bias in output plans, METI forecast production would fall a larger 2.5% in May.
* METI maintained its recent assessment, saying, “Production is picking up.” Despite fluctuations, industrial production “remains on a recovery track,” it said.
* In April, shipments rose 2.6% on month, the second straight gain after rising 0.4% the previous month, while inventories marked the first drop in two months, down 0.1% after rising 0.4% in March. The inventory index was at 94.7 (100 in 2015), the second lowest level during the current cycle. The lowest was 94.4 hit in February 2020.