–METI Survey: Output Likely to Slump in January, Rebound in February
–METI Keeps View After 2nd Straight 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 was nearly flat in December on cooling global demand, but down by a smaller-than-expected 0.1%, after an upwardly revised slight gain in November and a slump in October, as lower output of general machinery was partly offset by the recent recovery in the auto sector amid easing supply constraints, preliminary data released Tuesday by the Ministry of Economy, Trade and Industry showed.
Last week, the government downgraded its overall economic assessment for the first time in 11 months, citing slower growth in exports amid weaker global demand, while maintaining its view that modest recovery is in place, according to its monthly report released by the Cabinet Office.
The METI’s survey of producers indicated that output is likely to decline further in January and rebound in February.
The ministry maintained its view after downgrading it for the second straight month, 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 dipped a seasonally adjusted 0.1% on the month in December, coming in firmer than the median economist forecast of a 1.2% fall (forecasts ranged from a 1.8% drop to a 0.1% rise). It followed a 0.2% rebound (revised up from an initial 0.1% drop), a 3.2% slump in October, a 1.7% drop in September and gains of 3.4% in August and 0.8% in July. 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 supports the regional supply chain.
- Of the 15 industries, 10 posted decreases, and four recorded increases and one was unchanged from the previous month. Leading the decline were general machinery in reaction to one-off large orders for boiler parts placed the previous month. Output of internal combustion engines was curtailed in line with lower production of products that carry those engines due to shortages of other parts. Production of motor vehicles and semiconductor-producing equipment rose on the month.
- Factory production fell a seasonally adjusted 3.1% on the quarter in the October-December period after rebounding 5.8% in July-September and falling 2.7% in April-June.
- For the whole of 2022, output edged down an unadjusted 0.1% on year after rising 5.6% in 2021, plunging 10.4% in 2020 and falling 3.0% in 2019.
- Shipments of capital goods excluding transport equipment — a key indicator of business investment in equipment in GDP data — fell 7.1% on quarter in October-December after surging 13.1% in July-September, rising 1.3% in April-June and being flat in the first quarter of 2022.
- Based on its survey of manufacturers, METI projected that industrial production would be flat on the month in January (revised up from a 0.6% drop forecast last month) and rise 4.1% in February. Adjusting the upward bias in output plans, however, METI forecast production would slump 4.2% in January.
- The weakness in production is reflected in exports. The Bank of Japan’s real export index slumped a seasonally adjusted 4.7% on the month in December after edging up 0.1% in November. The index rose just 0.7% on quarter in October-December after rising 3.0% in July-September.
- The index of industrial production (100 in the 2015 base year) stood at 95.4 in December. 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 this year.
- 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.
- From a year earlier, the production index fell 2.8% in December, marking the second straight drop after posting its first fall in four months in November (revised up to a 0.9% drop from a 1.3% fall) and rising 3.0% in October and surging 9.6% in September. It was firmer than the median economist forecast of a 3.9% fall (forecasts ranged from 4.4% to 2.6% drops). Production showed double-digit percentage gains on year from April to July 2021 in reaction to the pandemic-caused slump the previous year.
Contact this reporter: max@macenews.com
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