By Max Sato
(MaceNews) – Japan’s industrial production continued chugging along in October for the fifth consecutive monthly rise, recovering much of the pandemic-triggered slump as solid demand for general machinery and automobiles more than offset lower output of electronic parts and devices, preliminary data released Monday by the Ministry of Economy, Trade and Industry showed.
While factory output has been propped up by recovery in the Chinese and U.S. economies as well as a gradual pickup in Japan, the ministry warned that a third wave of coronavirus infections sweeping Europe and other parts of the world is posing downside risks to domestic and global growth.
The key points from the data:
* Industrial production rose 3.8% from the previous month in October, coming in stronger than the consensus economist forecast of +2.3%. The increase was led by higher output of general machinery (conveyors, turbines, cranes, etc.), passenger cars ad trucks as well as laptop computers.
* The pace of increase was little changed from +3.9% in September (revised down from a preliminary +4.0%). Production fell between February and May, with a steep 9.8% decline in April.
* The level of the Index of Industrial Production climbed to 95.0 (100 in the 2015 base year) from 91.5 in September and a recent bottom of 78.7 in May, but it was still below 99.8 at the start of the year. “The level of production is still low, and thus it is expected to recover further,” the ministry said in a statement.
* From a year earlier, IIP dipped 3.2% in October for the 13th straight year-on-year drop, with the pace of decrease continuing to decelerate from -9.0% in September and -13.8% in August.
* Based on its survey of manufacturers, METI projected that industrial production would rise 2.7% on month in November (revised up from +1.2% forecast last month) and fall 2.4% in December. Adjusting the upward bias in output plans, METI forecast production would rise at a slower pace of 0.4% on month in November.
* METI maintained its assessment, saying, “Production is picking up.” The ministry urged a close watch on “downside risks to domestic and overseas economic growth posed by a renewed spread of infections.”
* In October, shipments gained 4.6% on month for the fifth straight rise while inventories fell 1.6% for the seventh monthly decline in a row, both indicating a steady pickup from the plunge in economic activity seen earlier this year when many businesses were closed or hours curtailed.
Sings of further pickup in Japan
“Shipments of capital goods (excluding transport equipment) used for business investment made consecutive gains in September and October, showing signs of recovery,” METI said. “They had been on a downtrend through August and lagging behind durable consumer goods and production goods that have been leading shipments.”
Japan’s government on Wednesday warned that global and domestic economies could come under further attack from recent spikes in coronavirus infections, according to its monthly report released by the Cabinet Office.
The government also maintained its cautiously optimistic view that both the domestic and global economies are “showing signs of a pickup,” a statement unchanged since July when it revised up its overview.
The government revised up its view on industrial production for the first time in two months, saying it is “showing signs of improvement,” while lowering its view on business investment for the first time in two months, noting it has been “decreasing recently.”
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Contact this reporter: max@macenews.com.
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