TOKYO – Japan’s industrial output fell for the second straight month in August as outbreaks of COVID-19 elsewhere in Asia disrupted supply chains for carmakers, already grappling with prolonged chip shortages.
Separate data on Thursday showed retail sales in August slipped for the first time in six months as homes cut spending amid the coronavirus relapse, indicating a lack of consumer sentiment.
Data showed the pandemic continued to wreak havoc in Japan’s economy this quarter, prompting an immediate challenge to the next prime minister, Fumio Kishida, who won the ruling party leadership vote on Wednesday ahead of general elections due in late November.
Factory production fell by 3.2 percent in August compared to the previous month, official data showed, due to weak production of cars and electronic machines and a contraction for the second straight month after a 1.5 percent decline in July.
The drop was bigger than economists forecast in a Reuters poll of 0.5 percent.
Major Japanese automakers including Toyota Motor Corp, Nissan Motor Co and Honda Motor Co have faced production cuts since late August due to component shortages, which could last well into October, the industry lobby said this month. warned in the beginning.
On Thursday, Suzuki Motor Corp. announced it would close two assembly plants in Japan for one to three days in October due to a supply crunch.
“The auto production cuts have affected many other related sectors, which should reduce supply if the plant is shut down,” said Takeshi Minami, chief economist at the Norinchukin Research Institute. “The interruption in recovery from the pandemic is lasting longer in Japan than in other countries.”
A government official told reporters that manufacturers surveyed by the government expected production to grow 0.2 percent in September and 6.8 percent in October, but given the uncertainties around car production cuts, the bold estimates included “big downside risks”. Huh.
The government downgraded its assessment of industrial production for the first time since April 2020, saying it was “stagnation”.
Analysts expect the world’s third-largest economy to grow at an annual pace of 1.2 percent this quarter, much weaker growth than other advanced economies, as the stop-go coronavirus hit private consumption.
“Japan’s July-September gross-domestic product now looks close to zero growth, with August production and consumption worse than expected,” Minami said, adding a weak result in September could turn it red.
Separate government data on Thursday showed retail sales were weaker than expected, falling 3.2 percent in August from a year earlier, dragged down by consumer electronics and clothing.
It marked the first decline in six months and was larger than the average market forecast for a 1.0 percent drop.
Retail sales worse than expected after Japan said earlier this week that it would remove the coronavirus pandemic in all regions by Thursday, leading to a sharp drop in COVID-19 cases and nearly 60 percent of the population as a whole. Vaccinated from.
Compared to the previous month, retail sales declined 4.1 percent seasonally adjusted.
By Kantar Komiya and Yoshifumi Takemoto
This News Originally From – The Epoch Times