Japan’s factory output extends declines on car production cuts

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TOKYO (Businesshala) – Japan’s industrial output fell for a second straight month in August as the COVID-19 outbreak elsewhere in Asia disrupted supply chains for carmakers, already reeling from prolonged chip shortages. Were facing headwinds.

FILE PHOTO: Smoke rises from a factory during sunset at Keihin Industrial Area in Kawasaki, Japan, January 16, 2017. Businesshala/Toru Hanai/File photo

Separate data on Thursday showed retail sales in August slipped for the first time in six months as homes cut spending amid the coronavirus relapse, indicating a lack of consumer sentiment.

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Data showed the pandemic continued to wreak havoc in Japan’s economy this quarter, posing an immediate challenge to the next prime minister, Fumio Kishida, who won the ruling party leadership here on Wednesday ahead of general elections due in late November. won the vote.

Factory production fell by 3.2% in August compared to the previous month, according to official data shown Thursday, marking a second consecutive month of contraction after weak production of cars and electronic machines and a 1.5% drop in July .

The drop was bigger than economists forecast in a Businesshala poll of 0.5%.

Major Japanese automakers including Toyota Motor Corp, Nissan Motor Co and Honda Motor Co have faced production cuts since late August due to component shortages, which could last well into October, the industry lobby said this month. There was a warning here in the beginning.

“The auto production cuts have affected many other related sectors, which should reduce supply if the plant is shut down,” said Takeshi Minami, chief economist at the Norinchukin Research Institute. “The interruption in recovery from the pandemic is lasting longer in Japan than in other countries.”

Manufacturers surveyed by the government expect production to grow 0.2% in September and 6.8% in October, but given the uncertainties around car production cuts, bold projections include “big downside risks”, a government briefer told reporters. said.

The government downgraded its assessment of industrial production for the first time since April 2020, saying it was “stagnation”.

Analysts expect the world’s third-largest economy to grow at an annual pace of 1.2% this quarter, much weaker growth than other advanced economies, as the stop-go coronavirus hit private consumption.

“Japan’s July-September gross-domestic product now looks close to zero growth, with August production and consumption worse than expected,” Minami said, adding a weak result in September could turn it red.

Separate government data on Thursday showed retail sales were weaker than expected, falling 3.2% in August from a year earlier, dragged down by consumer electronics and clothing.

This is the first drop in six months and was larger than the average market forecast for a 1.0% drop.

Higher-than-expected retail sales Japan said earlier this week that it would curb the coronavirus in all regions by Thursday, leading to a sharp drop in COVID-19 cases and fully immunizing nearly 60% of the population .

Compared to the previous month, retail sales declined 4.1% seasonally adjusted.

Reporting by Kantaro Komiya and Yoshifumi Takemoto; Editing by Daniel Lusink and Sam Holmes

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