Japan February Industrial Output Posts Small Rebound on Easing Covid Spike, Supply Shortages

–Carmakers, Electric/Telecom Makers See High Output in March, April

–METI: Forecast May Be Revised Down; Survey Taken Before March 16 Earthquake 

–METI Keeps View: Factory Output Shows Signs of Pickup

–METI Repeats: To Watch Effects of Pandemic, Parts Shortages, Ukraine 

By Max Sato

(MaceNews) – Japan’s industrial production posted a slight rebound in February, marking the first month-on-month rise in three months, thanks to easing effects of supply bottlenecks and a spike in Covid cases, preliminary data released Thursday by the Ministry of Economy, Trade and Industry showed.

The METI’s survey of producers point to strong growth in output in March and April, backed by catchup plans by automakers and manufacturers of electric and telecommunications equipment, but the ministry warned that the projection for March may be revised down because the survey was conducted before the powerful earthquake jolted northeastern Japan on March 16, forcing automakers to suspend operations at some factories. 

The ministry maintained its assessment, saying output is “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 and developments in the war in Ukraine.

The key points from the data:

* Industrial production edged up a seasonally adjusted 0.1% on the month in February, coming in weaker than the median economist forecast of a 0.5% rise. It was the first rise in three months after a 0.8% dip (revised up from a preliminary 1.3% drop) in January, a 1.0% fall in December and a record 7.0% rise in November.

* The increase was led by higher production of automobiles, transport equipment excluding vehicles (aircraft parts, train cars) and general and business machinery, which offset lower output of chemical products as well as information and communications equipment.

* Based on its survey of manufacturers, METI projected that industrial production would rise a solid 3.6% on month in March (revised up sharply from a 0.1% rise forecast last month) and jump 9.6% in April. Adjusting the upward bias in output plans, METI forecast production would rise 1.1% in March.

* The index of industrial production (100 in the 2015 base year) inched up to 95.8 in February. 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 in October and November.

* From a year earlier, the index gained 0.2% in February after falling 0.5% (revised up from a 0.9% drop) in January and rising 2.7% in December and rebounding 5.1% in November. 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 fell 1.3% on month in February, the second straight drop after falling a revised 1.6% the previous month, despite increased shipments from auto factories. Shipments of gasoline and diesel oil slipped in reaction to a rise in the previous month and due to routine repairs at some refineries. Shipments of capital goods including equipment to produce flat-panel displays marked the first drop in four months.

* Inventories marked the first rise in two months, up 1.9% on the month, after falling a revised 1.4% in January. The rise in shipments of automobiles (+4.1%) was slower than their output (+10.9%), leading to a higher inventory of cars and trucks (+21.2%).