Japan Industrial Output:

 Article Source:

https://mainichi.jp/english/articles/20230331/p2g/00m/0bu/032000c

Article:

TOKYO (Kyodo) -- Japan's industrial output in February rose 4.5 percent from the previous month for the first increase in two months after vehicle production increased on the back of easing semiconductor shortages, government data showed Friday.

The seasonally adjusted index of production at factories and mines stood at 94.8 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report. The increase followed a downwardly revised 5.3 percent contraction in January.

Ideas:

Industrial production is usually never a perfect linear curve as there are always periods of up and downs in the sector.

Such as the shortage of semiconductors in the industry and other challenges which might make it difficult to keep production going as planned.

The trick of course is to anticipate periods of shutdowns or shortages and plan accordingly the best a company can.

An index of 94.8 is not necessarily a bad number but of course not a great number too as it could have been worse related to the shortages.

Article:

The ministry retained its basic assessment from the previous month that industrial production is "weakening."

Of the 15 industrial sectors the survey covers, nine logged increased output while six saw decreases.

Leading the rise was motor vehicle output with a 15.4 percent expansion from the previous month, boosted by increased manufacturing of passenger vehicles and car parts, including engines.

Ideas:

Just what does a "weakening" description really mean. Nine sectors was increase while six saw decreases. That doesn't really sound like a weakening industry unless you include what happened in the previous months. 

Manufacturing of cars has always been a major driver of exports and the Japanese economy. And as shortages continue to not be a challenge there is no reason that the production of cars will continue to drive the Japanese economy.

The only challenge might be the continued problems related to China and exports or production in China in the future.

Article:

The production machinery sector also saw growth of 9.2 percent on the back of increased overseas demand, led by semiconductor-manufacturing equipment.

Among the six sectors reporting reduced output were chemicals excluding inorganic and organic chemicals and medicine, which dropped 11.8 percent due mainly to falling orders for cosmetics and lotions.

Ideas:

Perhaps the falling orders for cosmetics and lotions might be related to increased competition from countries who have have strong cosmetics and lotions sectors such as South Korea.

The global cosmetic industry is very competitive and is sometimes controlled by a few big companies and everyone else including Japanese companies might be struggling to keep their head above water each quarter.

But then again, in Japan, Japanese cosmetics are very strong so the real reason for the falling order might just be for export order and not orders in Japan.

Article:

The index of industrial shipments climbed 3.6 percent to 92.4, while that of inventories rose 1.4 percent to 103.6, the first time each category has risen in six months and three months, respectively.

Based on a poll of manufacturers, the ministry expects output to increase 2.3 percent in March and to go up 4.4 percent in April.

"Close attention needs to be paid to the effects of rising prices and parts and material shortages" on output, a ministry official said.

Ideas:

The category if inventories might means different things such as anytime there is a significant increase in inventories might be a slowdown in demand for some products and or it could mean a mismatch in production and sales estimates.

If the poll is correct it might mean manufacturers are optimistic about the future and see sales and production increasing.

Of course there is always the need to pay close attention to rising prices and materials shortages as it seems Japan is not of shortage challenge yet or even the increase in materials costs just yet.

Have a nice day and be safe!