–METI Downgrades View: Factory Output Pausing Vs. Showing Signs of Pickup
–METI Repeats: To Watch Effects of Pandemic, Parts Shortages, Inflation, Ukraine
By Max Sato
(MaceNews) – Japan’s industrial production posted the first month-on-month drop in three months in April as global reopening demand turned lower and Chinese Covid lockdowns caused further supply delays, preliminary data released Tuesday by the Ministry of Economy, Trade and Industry showed.
The METI’s survey of producers point to a rebound in output in May and a continued rise in June.
The ministry downgraded its assessment, saying output is “pausing,” compared to its previous statement that it was “showing signs of a pickup.” The METI repeated that it will keep a close watch on the drag from the pandemic on domestic and global growth as well as parts and materials supply shortages, rising prices and developments in the war in Ukraine.
The key points from the data:
- Industrial production fell a seasonally adjusted 1.3% on the month in April, coming in weaker than the median economist forecast of a 0.2% drop (the forecasts ranged widely from a 1.5% drop to a 1.5% gain). It was the first fall in three months after rising 0.3% in March and 2.0% in February and slumping 2.4% in January.
- The decline in April was led by lower output of electronic parts and devices as well as production machinery (including semiconductor-producing equipment) and vehicles (passenger cars, engines), which offset higher production of electric and telecommunications equipment (lithium-ion batteries, laptop computers).
- Based on its survey of manufacturers, METI projected that industrial production would rise 4.8% on month in May (revised up from a 0.8% drop forecast last month) and jump 8.9% in June. Adjusting the upward bias in output plans, METI forecast production would dip 0.5% in May.
- The index of industrial production (100 in the 2015 base year) fell to 95.2 in April. 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.
- 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.
- From a year earlier, the index slumped 4.8% in April after falling 1.7% in March and rising 0.5% in February. 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 were unchanged on month in April, after rising 0.6% in March, being unchanged in February and falling 1.5% in January. Shipments of lithium-ion batteries rose amid easing supply constraints and those of opening and closing control devices were up on higher demand from domestic factories and public facilities. By contrast, shipments of memory chips and liquid crystal displays fell as Chinese lockdowns choked parts supply.
- Inventories marked the second monthly drop in a row, down 2.5% in April after falling 0.4% in March and rising 2.1% in February. Lower production of lithium-ion batteries and laptop computers led firms to use inventories.
Contact this reporter: max@macenews.com
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