–METI Survey: Output Likely to Post Solid Rebound in December, Drop Sharply in January
–METI Official: Impact of Production Halt by Automaker Daihatsu Over Its Safety Test Scandal May Be Widespread
–METI Keeps View: Output Taking One Step Forward, One Step Back
–METI Repeats: To Watch Effects of Downside Risks to Global Growth, Rise in Inflation
By Max Sato
(MaceNews) – Japan’s industrial production posted its first drop in three months in November, down a smaller-than-expected 0.9% on the month, on a pullback in automobiles, auto parts and general machinery after recent gains as well as lower orders for electronic and communications equipment, preliminary data released Thursday by the Ministry of Economy, Trade and Industry showed.
From a year earlier, factory output came in firmer than expected, down 1.4% in November, after marking its first rise in five months in October with a modest 1.1% gain and falling 4.4% in each of September and August.
The METI’s survey of producers indicated that output is expected to post a solid rebound in December before dropping sharply in January. There is a downside risk to this outlook due to a shipment and production halt announced by Toyota Motor group firm Daihatsu over a vehicle safety scandal after the survey was conducted in early December.
The METI repeated its recent statement that it will keep a close watch on the effects of downside risks to global economic growth and a rise in prices.
The key points from the data:
* Of the 15 industries, 11 posted decreases from the previous month and four marked increases. The decline was led by lower output of small passenger cars and engines after recent gains brought on by improved supply chains as well as lower orders for semiconductor and integrated circuit testers and a pullback in radars after large orders placed in the previous month. Production of general machinery (conveyors and boilers) was also down in reaction to large transactions in the prior month.
* Based on its survey of manufacturers, METI projected that industrial production would rise 6.0% on the month in December (revised up from a 3.2% rebound forecast last month) and slump 7.2% in January. Adjusting the upward bias in output plans, METI forecast production would rise 3.2% in December.
* “There is a downside risk to overall production in both December and January due to Daihatsu’s decision to stop all domestic production (from late December throughout January),” a METI official told Mace News. “The impact will be widespread beyond the auto industry which has all kinds of suppliers.” Daihatsu executives last week released the results of a third-party investigation into the company’s falsified crash tests that showed 64 brands were involved and its manipulation of tests dates back to 1989.
* From a year earlier, the production index fell 1.4% in November after showing a modest 1.1% rebound (revised up from 0.9%) in October and falling 4.4% each in September and August. The decrease was smaller than the median economist forecast of a 2.2% decline (forecasts ranged from 3.5% to 1.4% drops).
* The seasonally adjusted index of industrial production (100 = 2020) stood at 104.0 in November, down slightly from a revised 104.9 in October. It is well above the recent bottom of 87.6 hit in May 2020 but below 108.8 seen in January 2020, when the pandemic hadn’t had a widespread impact yet. The index briefly jumped to 108.8 in April 2021, 109.0 in June 2021 and 107.8 in August 2022.
* 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. Output has since fluctuated widely, ending fiscal 2022 to March 2023 with a slight 0.3% drop on the year following a 5.5% jump in fiscal 2021 and a 9.5% slump in fiscal 2020.
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