Factory production in Japan in October edged up, ending a three-month slide and adding to signs that a global supply-chain crunch might have been easing before the emergence of the Omicron variant of SARS-CoV-2.
Higher output of vehicles and factory equipment lifted overall production 1.1 percent from September, the Japanese Ministry of Economy, Trade and Industry reported yesterday.
Manufacturers said that they plan to boost output again last month and this month, a good sign for Japan’s recovery this quarter.
Analysts had expected a 1.9 percent increase in October.
A separate report showed continued resilience in the labor market, with the unemployment rate ticking down to 2.7 percent and a measure of demand for workers showing positions on offer still outnumbering jobseekers.
While Japan’s manufacturing gains and positive production forecasts offer more evidence that Asia’s supply-chain shortages might be easing, the Omicron variant has reignited fears that a worst-case scenario could necessitate a return to growth-crippling lockdowns.
Japan yesterday closed its borders to new foreign arrivals, a move coming only weeks after the country managed to loosen restrictions amid plummeting case counts.
“If Omicron is found within Japan and triggers more restrictions, it could shift the recovery trajectory, but so far that doesn’t seem to be happening,” Itochu Research Institute economist Atsushi Takeda said. “September appears to have been the bottom for production.”
Bank of Japan Governor Haruhiko Kuroda on Monday said that he expects Japan’s economy to return to growth in the coming months, signaling that the emergence of Omicron had not changed his outlook much.
October’s production gain came as a shortage of parts from Asia began to ease and vehicle output increased for the first time in four months, a ministry official said.
Reports from Toyota Motor Corp showed that the group raised domestic output by about 22 percent in October, although the automaker’s global output is still down by more than one-quarter from last year’s level.
Manufacturers surveyed in yesterday’s report said that they plan to increase output by 9 percent last month and another 2.1 percent this month, but the reported plans tend to be overly optimistic and the survey was conducted before Omicron was discovered.
Semiconductor supplies also continue to be a problem.
Nissan Motor Co president Makoto Uchida said in an interview with Bloomberg Television this week that the company had expected to recover from shortages in the second half of the fiscal year, but he had become less optimistic.
The firm last month cut its sales plan for this year by 600,000 units due to continuing shortages.
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