TOKYO- Japan’s factory output fell for a second consecutive month in October, as stalling global demand and lingering supply bottlenecks put a lid on Japanese manufacturers’ production plans.
The feeble business activity highlights challenges for the world’s third-largest economy, which has been lagging behind peers in recovering from the pandemic even as the government readies another stimulus package to counter 40-year-high inflation.
“The pickup in production is pausing. For October-December, (Japan’s) production will likely be almost flat or slightly decrease from the previous quarter,” said Shumpei Fujita, economist at Mitsubishi UFJ Research and Consulting, pointing to the global economic slowdown as a culprit.
Factory output fell 2.6 percent in October from a month earlier on a seasonally adjusted basis, government data showed on Wednesday. The dip was larger than economists’ median forecast of a 1.5 percent decline and followed a revised 1.7 percent decrease in September.
Production machinery output slipped 5.4 percent, taking a hit from soft demand for equipment to make semiconductors and flat-panel displays. Electronic parts and devices output decreased 4.1 percent as semiconductors and liquid crystal panels were weak.
Decreasing demand for smartphones and electronic devices in big markets such as China led to the weak output in related sectors, a Ministry of Economy, Trade and Industry (METI) official told a media briefing.
But production in the auto-related sector, a key industry for Japan Inc with many suppliers involved, advanced 5.6 percent. While output of compact cars for the domestic market grew, production and shipment of export-oriented larger vehicles was down due to chip shortages, the METI official said.
METI cut its assessment of industrial output for the first time in five months, saying “production is gradually picking up, but some weaknesses are observed”.
