Japan's Industrial Output:

 Article Source: https://mainichi.jp/english/articles/20220831/p2g/00m/0bu/029000c

Article:

TOKYO (Kyodo) -- Japan's industrial output in July grew 1.0 percent from the previous month for the second consecutive month of increase, helped by the easing of parts shortages following the relaxation of COVID-19 restrictions in China, government data showed Wednesday.

The seasonally adjusted index of production at factories and mines stood at 97.1 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report. The climb followed an upwardly revised increase of 9.2 percent in June.

The ministry kept its output assessment from the previous month, with "fluctuates indecisively" reflecting the ups and downs in production in recent months.

Ideas:

There are going to be ups and downs for a long time as the after affects of the pandemic situation including parts shortages and the China situation is going to linger for a while.

Until the global economy can eventually get back to some kind of normal or even some kind of new normal there are going to be ups and downs more than the usual seasonal fluctuations before the pandemic.

Parts shortages and all that is related to them might be the norm for the time being. And add in the constant inflation situation and this might be the new normal that industry and business have to factor in to their plans for the future.

Article:

Of the 15 industries covered by the survey, six logged output increases and eight declined. Pulp and paper output remained flat.

By sector, the auto industry saw the biggest increase of 12.0 percent from the previous month, led by the manufacturing of passenger and compact cars, with the ministry attributing the growth to the easing of parts shortages after the lifting of coronavirus lockdowns in China in June.

Other industries reporting output rises included general-purpose and business-oriented machinery, up 8.6 percent, and production machinery, up 5.9 percent.

Ideas:

An economy is very complex and it is never in a linear upward growth for all industries. Even in the best of times there are going to be some that show positive growth, some that show some but minimal growth, and some that show no growth at all.

China might have lifted the lockdowns is some areas or parts of China but it has a long way to go before China gets back to any kind of normal. The problem tomorrow is it could be back in lockdown again and again companies that depend on parts from China are now back in the same situation as before.

Until China ends is zero policy all companies globally will be subject to the same problems each time that a certain part of China goes into lockdown again.

Article:

Among industries seeing output declines, electronic parts and devices, including memory chips, dropped 9.2 percent. Chemicals, excluding inorganic, organic chemicals and medicines, fell 4.9 percent, and iron, steel and non-ferrous metals decreased 1.6 percent.

The index of industrial shipments rose 1.6 percent to 95.2, while that of inventories remained flat at 99.6.

Based on a poll of manufacturers, the ministry expects industrial output to grow 5.5 percent in August and rise 0.8 percent in September.

Ideas:

Electronic parts and devices are still part of the global problem of the continued chip shortage sitution. One German car executive said the situation could last one more year.

So how did it get this way and why? One can blame the pandemic and the production shutdowns that slowed down the production and the back-log of shipping related to the products.

Some might say the sudden surge in demand for chips related to all products and companies have not been able to meet demand.

Some might say the shortage of the rare-earth materials needed for chip manufacturing as the main problem.

Some of course would say a combation factors that all came together at the perfect time to create a perfect storm globally that caused the chip shortage

Whatever the reasons the chips shortage is not going away any time soon and companies need to adjust, find new sources of materials and so on.

Have a nice day and be safe!