Japan Industrial Output:

 Article Source:  https://mainichi.jp/english/articles/20220428/p2g/00m/0bu/026000c

Article:

TOKYO (Kyodo) -- Japan's industrial output in fiscal 2021 expanded at a record 5.8 percent from the previous year after two straight years of setbacks due to the coronavirus pandemic, government data showed Thursday.

In the year through March, the index of production at factories and mines stood at 95.5 against the 2015 base of 100. The rate of increase, following a 9.6 percent plunge in the previous year, was the highest since comparable data became available in fiscal 2014.

The data showed, however, that Japan's industrial output has not recovered to pre-pandemic levels, with the index standing at 99.9 in fiscal 2019.

Ideas:

Japan's industrial output might have increased but it must be remembered just how much it decreased the previous two years.

So even though there was a 5.8 percent increase, its not as much as it probably should have been considering where it was in 2019.

Japan's industrial output might not reach the pre-pandemic level anytime soon with challenges in raw material costs, energy costs, and the continued shortages related to chips and other commodities.

It might take up to a year or more for the index to get back to the 2019 level as there are still many challenges related to inflation, the pandemic, and the Ukraine war situation.

Article:

Production was on a downward trend until last September due to shortages of semiconductors and parts supply disruptions in Southeast Asia due to COVID-19 but has been recovering since, led mainly by a pickup in production machinery output.

The country's output in March climbed 0.3 percent from the previous month, as the impact of the coronavirus pandemic waned, the Ministry of Economy, Trade and Industry said in a preliminary report, following a revised 2.0 percent rise in February.

The ministry retained its basic assessment that industrial production was showing signs of picking up based on the figures in March.

Ideas:

Industrial production might be picking up but its still not where is should be just yet, as there are might be many hidden weaknesses that are going to slow down the pace of production.

All of the challenges that have affected production the past two years are not suddenly going to just disappear, as some of them still there and will remain for awhile longer.

The pandemic has produced a number of new challenges for every economy and Japan is no different. The key is to indentify what the new challeges are and be able to manage them so that production can get back to the 2019 in the near future.

Prodction sometimes runs on a up and down trend, as some quarters prodction is very good and some quarters production is just so so meaning not much change from one quarter to the next, as their are always challenges to production schedules related to shipping, materials, and energy challenges.

Article:

Output in eight sectors including semiconductor manufacturing equipment and other production machinery grew, while declining in seven sectors such as automobiles and related equipment, which dropped 6.0 percent due to the impact of an earthquake that rattled northeastern Japan in the month.

"We will continue to watch for a potential rise in coronavirus infections, parts supply shortages and rising prices, in addition to monitoring the situation in Ukraine," a ministry official told reporters.

Ideas:

Each sector has its own challenges and must be examined closely and not just lump every sector in one lump sum and examine just what the challenges are and what are companies doing to overcome the current challenges that exist.

The auto industry in Japan and globally will continue to have challenges now and in the future as shipping challenges, chip challenges, and energy challenges will continue to affect the auto industry for the time being.

Industrial production is a major component of the Japanese economy but will continue to cause a strain on economic growth until all of the challenges can be overcome in the future.

But how long that takes is the major question that needs to be looked at carefully.

Article:

The index of industrial shipments in the final month of fiscal 2021 rose 0.5 percent to 93.2, marking the first increase in three months, while that of inventories fell 0.6 percent to 100.7.

Based on a poll of manufacturers, the ministry expects output to grow 5.8 percent in April and decline 0.8 percent in May.

Ideas:

An increase in industrial shipments show some signs of improvement meaning there is continued demand for Japanese industrial products. 

The fact that inventories decreased 0.6 percent could be nothing more than a some work related stoppages or production schedule challenges and or it could also be there was an increase in demand and production was not able to keep up with the demand.

An increase of 5.8 percent in April means production is continuing to improve as maybe the current challenges related to industrial production are beginning to decrease some.

The projected decrease in May might no more than the Golden Week holiday period where companies take a break and don't produce was much.

Have a nice day and be safe!