— Japan’s METI Downgrades View: Factory Output Pausing Vs. Picking Up
–METI Repeats: Watch Effects of Rising COVID Cases, Global Chip Shortages
By Max Sato
(MaceNews) – Japan’s industrial production posted an unexpectedly large decline in August as pandemic-caused lockdowns in Southeast Asia are straining parts supplies further and global semiconductor shortages lingered, preliminary data released Thursday by the Ministry of Economy, Trade and Industry showed.
chip shortages.
The key points from the data:
* The decrease was led by lower production of passenger cars, engines, lithium-ion batteries, laptop computers and production machinery. The auto industry has been hit hard by supply chain constraints.
* “In addition to protracted semiconductor shortages, there was a shortage of materials supplied from Asia where economic activity was restricted amid spreading new coronavirus infections, which led to the second consecutive decline (in production),” METI said in a statement.
* 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 rose between June and November, with a sharp 6.0% rebound in July.
* The Index of Industrial Production (100 in the 2015 base year) fell to a three-month low of 95.0 in August. It was well 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 rose 9.3% in August, with the pace of increase decelerating further from 11.6% in July and 23.0% in June. It was the sixth consecutive year-over-year gain in reaction to the pandemic-depressed activity last summer.
* Based on its survey of manufacturers, METI projected that industrial production would edge up 0.2% on month in September (revised down from +1.0% forecast last month) and rise 6.8% in October. Adjusting the upward bias in output plans, METI forecast production would fall 1.3% in September.
* In August, shipments slumped 3.8% on month, the second straight drop after falling 0.3% the previous month, as supply chain disruptions delayed shipments of automobiles and laptop computers.
* Inventories also marked the second consecutive fall, down 0.3% after falling 0.7% in July, led by continued drawdowns of vehicles.
Supply Chain Constraints Hit Output, Exports
Earlier this month, Japan’s government provided a more cautious view of the recent pickup in the domestic economy, saying its pace is slowing in the face of global supply chain constraints and a surge in coronavirus cases.
In its monthly economic report, the government downgraded its assessment of factory output for the first time in 17 months, saying it is “picking up, although some weakness is seen.” Previously, it said production was “picking up.”
Last week, the Bank of Japan also noted that supply chain disruptions are “affecting some Japanese exports and factory output,” but also maintained its view that they are still “increasing.”
The BOJ’s real export index slumped a seasonally adjusted 3.7% on month in August, the first drop in three months (+1.6% in July, +0.6% in June and -0.4% in May). In July-August, the index was flat (-0.0%) on quarter after rising 3.4% in April-June for the fourth consecutive rise.
Exports rose 26.2% in August from a year earlier for the sixth year-over-year rise in a row, with the pace of increase decelerating from 37.0% in July, 48.6% in June and 49.6% in May, according to the Ministry of Finance.