Production at Japanese factories soars with return of auto production

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A worker walks near a factory in the Keihin Industrial Zone in Kawasaki, Japan on February 28, 2017. REUTERS / Issei Kato

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  • November production increases 7.2%, more than expected
  • Auto production rebounds 43.1% m / m in November
  • Manufacturers see production increase in December and January

TOKYO, Dec.28 (Reuters) – Production at Japanese factories surged at the fastest pace on record in November, as easing bottlenecks in the global supply chain helped auto production out of its recent crisis, increasing the prospects for a strong economic rebound in the fourth quarter.

But while improving manufacturing conditions bring some relief to 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.

Industrial production rose 7.2% in November from the previous month, posting its biggest jump since 2013, when comparable data became available, thanks to higher production of motor vehicles and products. in plastic.

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That means production rose for the second month in a row after rising 1.8% in October and was up faster than the 4.8% gain expected in a Reuters poll.

“Production is back to where it was before because auto production has rebounded,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.

“But seen from a global perspective, supply bottlenecks and in particular the chip shortage are expected to persist, slowing the pace of the resumption of production.”

Data showed that production of cars and other motor vehicles jumped 43.1% from the previous month in November, also a record, while production of plastic products rose 9.5% .

Despite the stronger production, Japanese automakers are still unable to completely get rid of the lingering global parts and chip supply issues.

Leading Japanese automaker Toyota Motor Corp (7203.T) said last week it would halt production at five domestic factories in January due to supply issues and the health crisis. Read more

Analysts say the auto industry could suffer a prolonged impact from chip supply disruptions as chipmakers focus on producing advanced semiconductors over less advanced chips.

“What is required for cars is not advanced chips,” said Chihiro Ohta, managing director of investment research and investor services at SMBC Nikko Securities. “They need older generation models.”

Manufacturers expect production to increase 1.6% in December and 5.0% in January.

However, an official from the Ministry of Economy, Trade and Industry (METI) warned that business forecasts in the monthly survey tended to be overly optimistic.

The production of durable consumer goods increased by 39%, while that of capital goods, which analysts say is closely related to the capital expenditure component of gross domestic product (GDP), remained unchanged from the capital expenditure component of gross domestic product (GDP). in the previous month.

More generally, analysts expected the Japanese economy to grow 6.1% annualized in the current quarter, rebounding from a recession in the third quarter with an expected pickup in consumer activity. and businesses, according to a Reuters poll this month. Read more

Separate data released on Tuesday showed the unemployment rate rose to 2.8% from 2.7% the previous month, while an index measuring job availability stood at 1.15, unchanged from the previous month. to October.

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Reporting by Daniel Leussink; Additional reporting by Yoshifumi Takemoto, Kentaro Sugiyama and Kantaro Komiya; Editing by Sam Holmes

Our standards: Thomson Reuters Trust Principles.

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