Japan Industrial Output:

 Article Source:  https://mainichi.jp/english/articles/20220131/p2g/00m/0bu/028000c

Article:

TOKYO (Kyodo) -- Japan's industrial output in 2021 grew 5.8 percent from a year earlier but remained below its precoronavirus pandemic level amid a resurgence of infections and a global semiconductor shortage, government data showed Monday.

The seasonally adjusted index of output at factories and mines in 2021 stood at 95.9 against the 2015 base of 100, with the fastest increase since comparable data became available in 2014, following the worst decline of 10.4 percent in 2020, the Ministry of Economy, Trade and Industry said in a preliminary report.

Although the annual figure logged the first rise in three years since 1.1 percent growth in 2018, the latest production level was far lower than the reading of 101.1 in 2019, before the pandemic began to weigh on the domestic and global economies.

Ideas:

The Japanease economy might not get back to the pre-pandemic level for a while as there are holes in the Japanese and global economy.

While production and manufacturing seem to be moving in the right direction despite the global chip shortage and the global energy situation, the services side is far from healthy. It might take more than a year for it to get back to some kind of normal or even a new normal.

It will be hard to replace the thousands of Chinese tourists or even the thousand of foreign tourists from anywhere else in the near future.

And now with the Ukraine crisis the global economy is going to be even more challenged in the near future.

Article:

Japan's output recovery was slowed by a global semiconductor shortage and a suspension of parts production in Southeast Asia due to a surge in COVID-19 cases that dealt a blow to the auto industry in the world's third-largest economy, according to a ministry official.

The annual index of industrial shipments rose 4.8 percent to 93.9, while that of inventories was up 5.5 percent at 98.3.

In December alone, the index fell 1.0 percent to 96.5 from the previous month for the first decline in three months, led by weak output of general-purpose and business-oriented machinery, such as water tube boilers and internal combustion engines, as well as production machinery including chip-making equipment.

Ideas:

Japan's output is always going to be cycical and not grow in a linear fashion as there are always supply challenges, demand challenges, seasonal challenges, add in any external global challenge and there will always be challenges for output to grow in a linear path.

Companies need to recgonize that there are going to be output challenges and prepare accordingly with making sure there is room for flexibility in their production schedules and in their supply and logistics. 

For example, while it worked in the past Toyota's lean manufacturing might not be the best approach in the 21st century. Or perhaps Toyota needs to decide what are the most important parts that we need to keep good supply in case of supply challenges and what can we only keep a minimal supply in our plants.

Inventories are always an interesing measurement. If inventories start to get too low, it could mean several things. It might mean that demand for a product is/was higher than expected and or demand projections were off. 

If there is trend of a surplus of inventories it could mean demand slowing and companies need to take appropriate actions to make sure demand doesn't continue to buildup in its warehouses.

Article:

The December index followed a downwardly revised 7.0 percent increase in November.

The official said the spread of the highly contagious Omicron variant of the coronavirus that has led to a resurgence of infections in Japan likely had no impact on output in the reporting month.

Based on manufacturers polled in a survey, the ministry said it expects output to advance 5.2 percent in January and climb 2.2 percent in February. It retained its assessment of the data, saying output at factories and mines "shows picking-up movement."

Ideas:

As this is now the 5th or 6th wave of the pandemic, maybe many companies have learned how to prevent or reduce the impact on the pandemic on its employees.

And at the same time maybe everyone might be taking the omicron virus situation a littel less serious and many or most have been vacinnated if not the booster shot.

So while there are infections continuing there might be the mindset of getting back to some kind of normal now if that hasn't happened yet. 

But even if workers try to get back to some kind of normal, with infections occuring, how long is it going to take for the services sector to get back to some kind of normal.

But some might say, if you go out and walk around the subway or train stations there are people everywhere, and it looks like things have returned to normal. 

That mgiht be so, but service type business were dug into a deep hole and its going to take them a long time to get back any kind fo normal.

So while manufacturing output might be getting back to normal or some kind of new normal, the services side of the economy might take a very long time to dig out of its two year deficit.

Article:

But Takeshi Minami, chief economist at the Norinchukin Research Institute, was cautious about the outlook, referring to the recent sluggish recovery of the car industry as the spread of the variant has forced some domestic companies to suspend production.

"After the supply side issues around September and October eased, the auto industry had been rebounding, but December's (1.5 percent) increase in output was small and its level was still off from the recent peak in March," said Minami, adding that car production will likely remain at a "standstill" for the time being.

In December, the index of industrial shipments fell 0.1 percent to 95.2, while that of inventories increased 0.5 percent to 101.2, according to the ministry.

Ideas:

Car production might be somewhat sugglish or at a standstill that doesn't mean all car companies or all plants in every country where Japanese car companies produce are the same.

Some might be produicing more than others and maybe some car production plants just might be producing normally.

And there is still the chip challenge that car companies and any company that produces electronic products are having to deal with at this time.

There is always the idea that sales of cars are not linear meaning there are going to be months or season of good sales and months and seasons of less than good. 

Buying a car is a major purchase decision that consumers might do only once every five years and maybe only at certain times of the year. Of course there are enough consumers or car purchasers out there that car companies can reasonablly expect to see a constant sales stream throughout the year. Some a little more one month than another month.

Have a nice day and be safe!