Japan Industrial Output:

 https://mainichi.jp/english/articles/20210331/p2g/00m/0bu/047000c

Article:

TOKYO (Kyodo) -- Japan's industrial output in February fell 2.1 percent from the previous month as a strong earthquake that struck northeastern Japan disrupted parts supply for major automakers, reducing their production, government data showed Wednesday.

The seasonally adjusted index of production at factories and mines stood at 95.7 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report. The result followed an upwardly revised 4.3 percent rise in January.

The auto sector led the decline, falling 8.8 percent from the previous month in the wake of the Feb. 13 earthquake. Automakers were also forced to cut production due to a global chip shortage, according to the ministry.

Ideas:

Industrial output is always very cyclical depending on many variables, including natural events such as earthquakes.

If the parts supply production factories are mostly located in the Tohoku region or northeastern Japan, then it would definitely have been a problem for automakers, for example in the Nagoya region where Toyota is located.

Indexes should only be a guide as to what might be happening and never taken as 100 percent truth as they never really tell the complete story of what might be happening.

Many times indexes tend to report on the large companies and not really the full economy, or maybe never about small and medium sized companies.

The global chip shortage is a trend and a concern. If Taiwan, which is a large chip producer, which is beginning to see challenges related to some new virus strains, it could cause more challenges for car makers in the future.

Article:

Makers of electrical machinery and information and communication electronics equipment saw a 2.9 percent decrease in reaction to a 7.6 percent boost in output in January, it said.

Despite the fall, the ministry maintained its assessment of industrial output, saying it is "picking up."

"Overall, the recovery trend in output is continuing," a ministry official said, adding that the earthquake was a one-off factor.

The ministry expects production to rise in the January-March period for the third straight quarterly increase.

Based on a poll of manufacturers, the ministry expects output to fall 1.9 percent in March and jump 9.3 percent in April.

Ideas:

An economy is very complex. And as such so is industrial output. 

Some industrial output might actually be improving and some might be decreasing.

Its just like in a real economy. Because there are so many moving parts of an economy, some parts of an economy might be showing real signs of growth or recovery, while some parts may be are a long way from a recovery or real growth.

Production may indeed improve for third straight quarter, which is always good. But there is a long way to go before it reaches pre-pandemic levels.

Output again is very cyclical depending on variety of factors. 

Article:

But the ministry cautioned that the surveys, conducted by March 10, do not factor in developments in the novel coronavirus pandemic that occurred later in the month, such as a resurgence of infections in areas where the government's state of emergency was lifted.

The polls were also conducted before the March 19 fire at a plant of major Japanese chipmaker Renesas Electronics Corp., which fueled concerns amid the global supply crunch of semiconductors, especially those for vehicles.

Renesas said Tuesday full-scale semiconductor production at the fire-hit plant might only resume in June.

"The fire could pose a downside risk to production," the official said.

In February, the index of industrial shipments decreased 1.5 percent to 94.4 while that of inventories fell 1.0 percent to 94.3.

Ideas:

The virus seems to come in waves as the emergency situation is lifted and the re-instated in different prefectures.

The fire at a major Japanese chip maker had to be concern for those companies that relied on chips from that company.

It just goes to show that companies, as much as possible should have more than one supplier available as needed in case of emergency situations occur.

Just as the pandemic in 2020 caused major logistical and supply chain problems, companies now need to be able to make sure they are flexible enough, if possible to guard against major disruptions in supply chain challenges and logistical challenges as much as possible.

Again indexes are nothing more than a glimpse into what be happening. They should never be taken as 100 percent truth on any area of an economy.

Have a nice day and be safe!