Japan's factory output soars as car production returns
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[December 28, 2021] By
Daniel Leussink
TOKYO (Reuters) -Japan's factory output
jumped at the fastest pace on record in November, as easing global
supply chain bottlenecks helped car production leap out of its recent
slump, lifting prospects for a strong fourth-quarter economic rebound.
But while improved manufacturing conditions provide some relief for
policymakers, persistent global semiconductor shortages and new risks
from the Omicron coronavirus variant are expected to cloud the outlook
for the world's third-largest economy.
Factory production gained 7.2% in November from the previous month,
posting its largest jump since 2013 when comparable data first became
available, thanks to rising output of motor vehicles and plastic
products.
That meant production rose for the second straight month after
increasing 1.8% in October and posted a faster rise than the 4.8% gain
expected in a Reuters poll.
"Output recovered to where it was previously because car production
rebounded," said Takeshi Minami, chief economist at Norinchukin Research
Institute.
"But seen from a global perspective, supply bottlenecks and especially
the chip shortage are likely to be prolonged so that will slow down the
recovery pace of output."
The data showed output of cars and other motor vehicles surged 43.1%
from the previous month in November, also a record, while plastic
products production rose 9.5%.
Despite the stronger output, Japanese automakers are still unable to
completely shake off the drag from persistent global parts and chip
supply issues.
Japan's top automaker Toyota Motor Corp said last week it would suspend
production at five domestic factories in January due to supply issues
and the health crisis.
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A worker walks near a factory at the Keihin industrial zone in
Kawasaki, Japan February 28, 2017. REUTERS/Issei Kato
Analysts say the auto sector could see a prolonged impact from chip supply snaps
as chipmakers focus on producing cutting-edge semiconductors over less advanced
chips.
"What is required for cars aren't the state-of-the-art chips," said Chihiro Ohta,
general manager for investment research and investor services at SMBC Nikko
Securities. "They need old-generation models."
Manufacturers expect output to rise 1.6% in December and 5.0% in January.
However, a Ministry of Economy, Trade and Industry (METI) official cautioned
firms' forecasts in the monthly survey tended to be overly optimistic.
Output of durable consumer goods rose 39%, while that of capital goods, which
analysts say is closely related to the capital spending component in gross
domestic product (GDP), was unchanged from the previous month.
More broadly, analysts expected Japan's economy will grow an annualised 6.1% in
the current quarter, rebounding from a third-quarter slump with consumer and
corporate activity expected to recover, a Reuters poll showed this month.
Separate data on Tuesday showed the jobless rate rose to 2.8% from the previous
month's 2.7%, while an index gauging job availability was at 1.15, unchanged
from October.
(Reporting by Daniel Leussink; Additional reporting by Yoshifumi Takemoto,
Kentaro Sugiyama and Kantaro Komiya; Editing by Sam Holmes)
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