Asian Factory Output:

 https://mainichi.jp/english/articles/20211001/p2g/00m/0bu/044000c

Article:

(AP) -- Shortages of power, computer chips and other parts, soaring shipping costs and shutdowns of factories to battle the pandemic are taking a toll on Asian economies.

While business sentiment is improving in some parts of Asia as governments begin easing restrictions put in place to curb coronavirus infections, there is mounting evidence that such disruptions are slowing a return to business as usual.

A quarterly survey by the Bank of Japan released Friday showed sentiment among manufacturers at its highest level in nearly three years. The survey found companies plan to raise investment more than earlier forecast, but that shortages of components were disrupting production.

Ideas:

The pandemic has caused a lot of disruptions in supply chains everywhere. Businesses might be feeling more positive because the pandemic seems to be nearing an end or nearing where it causes major problems related to the number of new cases but challenges continue on the latent problems that seem to keep starting that were not a problem a year ago.

Now might be the best time for companies to invest or spend just before everything gets back to some kind or normal or new normal. As those companies who plan ahead and invest when everything is not so good, and then economic conditions do improve, they are ahead of the competition who might have decided to wait until everything was good or perfect.

Article:

That dovetailed with data released Thursday that showed Japan's factory output fell 3.2% in August from the month before. That followed a 1.5% decline in July.

Automakers and producers of IT products and other electrical machinery were the hardest hit.

Japan's Suzuki Motor Corp. became the latest automaker to idle production lines for a few extra days due to shortfalls in components. Suzuki said in a statement that it expected to suspend operations at a factory in central Japan for an extra three days and to do the same two days at another factory.

Ideas:

Its not surprising that Japan's factory output fell in August, as the number of virus cases exploded in August and the summer was the beginning of the supply shortage including chips.

Its not easy for a company and its production lines when they have to stop then start and then stop and then start over and over because of supply shortages.

So eventually it begins to effect customer orders and then cuts into profits.

Unfortunately this might be jus the beginning of the shortages as they might continue into Q4 and maybe even Q1 in 2022 in the regular calendar year not Japan's fiscal year.

So while everyone or many are maybe see light at the end of the tunnel related to the virus cases, the manufacturing industry and exports, which had come back quickly from the spring 2020 problems, are not seeing unexpected challenges which could begin to effect Japan's overall economic growth.

Article:

While there are signs of improvement in some parts of Asia, "fresh peaks for new daily cases in some countries and relatively slow progress in vaccination rollouts in Southeast Asia mean the risks of semiconductor and other component shortages could persist for an extended period," Harumi Taguchi of IHS Markit said in a commentary.

Japan's retail sales fell a much worse than expected 4.1% in August from a month earlier due to weak demand for clothing and appliances.

In another sign of slowing activity, surveys of factory managers also showed Chinese manufacturing slowing.

Ideas:

Even though, for many places, there might be the beginning of the light at the end of a long 18 month pandemic tunnel, there are still many places that are still not so good. 

So even places that feel they are seeing progress need to be vigilant as we've seen, the virus situation and new variants seem to keep coming back but none really since the summer peak.

The fall in retail sales of clothing and appliances might be related to the summer surge in the virus or it might be nothing more than consumers deciding not to buy as maybe the felt they didn't need new clothes and or new appliances. But the most likely explanation might be the summer surge in the virus situation.

The slowing of Chinese manufacturing most likely is related to the power shortages now in China along with the shortages of component parts needed by manufacturing companies.

Article:

The manufacturing purchasing managers index, or PMI, fell to 49.6 in September from 50.1 in August on a 0-100 scale where 50 marks the break between expansion and contraction.

The survey was conducted before power shortages began causing factories in some parts of China to begin suspending operations.

The weakest readings were in energy intensive areas such as chemicals and metals, Julian Evans-Pritchard of Capital Economics said in a report.

Ideas:

A decrease from 50.1 to 49.6 can't be considered a major change in manufacturing sentiment or feeling as to what they think about the future and purchasing decisions.

The power challenges in China are going to effect many companies and sectors if China doesn't fix the problem.

But the real problem, for example if its coal producing energy plants, as now many in society and in business want to see the end of the use of coal. But unfortunately many businesses and manufacturing companies still rely too much on coal.

If the energy challenges in China are related to other forms or energy, then it should be a wakeup call to China that it needs to protect its energy producing sources or suppliers to keep the factories running in China before companies begin to move to Vietnam or other places as they are beginning to do already.

Article:

"Respondents to the surveys noted that material shortages and transportation delays were still holding back output," he said.

Surging demand for computers and other equipment for remote work has strained supplies of the microchips that run them.

Shortages of shipping containers and occasional shutdowns of ports due to COVID-19 outbreaks also have caused bottlenecks throughout global supply chains.

"Chinese and South-east Asian ports are still suffering the consequences of those earlier closures, with record queues of ships waiting to unload," Rabobank said in a report on the shipping industry.

It estimated that 10% of global container capacity was waiting offshore for unloading.

Ideas:

Material shortages most likely will continue into the near future and maybe into 2022.

And then there is the transportation shortages and the situation gets worse for manufacturers.

It will be interesting just how much longer the demand for computers will continue due to the pandemic as, for example, many companies in Japan are calling back their workers to work again in company offices.

And at the same time, if at all possible. are Japanese workers in companies, who might have spent the better part of working from home or a combination of working from home and going to the office a few days a week, have a say as to what they want to do in terms of where they work like some workers in the US/UKEU might be challenging the idea now of a traditional work life or everyday in the company office.

And then there is the global shipping challenges that now seem to be effecting many companies and many countries with no end in sight.

So add all of this together, factory shutdowns, parts shortages, power/energy challenges, and the shipping/ports/containers challenges including shipping fees that way to high and its doesn't look like the global economy is anywhere out of the pandemic situation or the pandemic caused challenges.

Have a nice day and be safe!