— General, Production Machine Output Lower; Autos Continue Picking Up
— METI Repeats: Factory Output Shows Signs of Pickup
— METI: Effects of Rapid Spread of Pandemic, Parts Shortages Emerging
By Max Sato
(MaceNews) – Japan’s industrial production posted the first drop in three months in December, taking a breather after a surge in November, but carmakers continued benefiting from easing supply constraints amid the uncertainty posed by the pandemic, preliminary data released Monday by the Ministry of Economy, Trade and Industry showed.
Production picked up slightly on quarter in October-December after slumping the previous three-month period.
The ministry maintained its assessment, saying output is “showing signs of a pickup.” It upgraded its view in December from its previous view that output was pausing. It noted the effects of the rapid spread of the pandemic and parts supply shortages on domestic and global economic growth have become more apparent.
Shipments of capital goods excluding transport equipment marked the second straight quarterly drop in October-December, indicating the lingering impact of supply bottlenecks on business investment in equipment. Japan’s fourth-quarter GDP is due on Feb. 15.
The key points from the data:
- Industrial production fell a seasonally adjusted 1.0% from the previous month in December, as expected. It was the first drop in three months after a record 7.0% rise (revised down from an initial 7.2% increase), a 1.8% gain in October and a 5.4% slump in September.
- The decrease was led by lower production of general and production machines while automobile production continued to rise amid easing supply constraints.
- Production rose 1.0% on quarter in the October-December period, posting the first rise in two quarters after slumping 3.7% in July-September and rising 1.1% in April-June. For the whole of 2021, output rose 5.8% on year, the first annual rise in three years following decreases of 10.4% in 2020 and 3.0% in 2019.
- 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.
- The index of industrial production (100 in the 2015 base year) stood at 96.5 in December. 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.
- From a year earlier, the index rose 2.7% in December after rebounding 5.1% (revised down from a 5.4% rise) in November and falling 4.1% in October. The previous gains were in reaction to the pandemic-depressed activity in the summer of 2020.
- Based on its survey of manufacturers, METI projected that industrial production would rise 5.2% on month in January (revised up from a 5.0% rise forecast last month) and gain a further 2.2% in February. Adjusting the upward bias in output plans, METI forecast production would edge up 0.6% in January.
- Shipments dipped 0.1% on month in December, the first drop in three months after rising 7.4% the previous month. The weakness was seen in general and production machinery, as in production. Automobile shipments continued rising.
- Shipments of capital goods excluding transport equipment – a key indicator of domestic demand in GDP data – rose 0.7% on month in December after rising 0.4% in November and falling 0.7% in October. In the final quarter of 2021, those shipments fell 4.3% on quarter after falling 2.5% in the third quarter.
- * Inventories marked the fourth straight increase, up 0.4% on the month after rising a revised 2.0% in November. Oil refineries increased production after routine maintenance while shipments of refined oil products slowed, leading a slight buildup in inventories.
Contact this reporter: max@macenews.com
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