Industrial production in Japan last month jumped by a record, adding to evidence that a manufacturing recovery from supply-chain snags was solidly under way before the Omicron variant of SARS-CoV-2 started to spread worldwide.
A bounce back in the auto industry helped production climb 7.2 percent from October’s level, the biggest gain in data going back to 1978, data from the Ministry of Economy, Trade and Industry showed yesterday.
Analysts had expected a 4.8 percent increase.
Photo: AFP
Despite last month’s surge, production remained below July’s level, an indication of how damaging global supply-chain blockages have been to Japan’s key manufacturing sector. Last month’s production was 5.4 percent above levels from a year earlier, but still sharply down from a high in April.
A ministry official said that the Omicron variant has added another element of uncertainty to the outlook.
This month, the government sees manufacturers trimming output by 1.2 percent, contradicting data in yesterday’s report that showed increases, the official said, adding that companies tend to be overly optimistic in their reported plans.
Still, last month’s strong output gains suggest that the Japanese economy might be back on a more steady recovery path, after shrinking in five of the past eight quarters.
Better-than-expected factory production from Japan also signals that global trade could be regaining its footing and could give more strength to a recovery that analysts have so far pegged mostly to improved consumer spending.
Economists have forecast a shopping revival leading Japan’s return to growth this quarter, following the lifting of emergency restrictions at the end of September and rapid progress in vaccinations. Higher production could add another growth driver.
Last month, output gained in 11 of the 15 industries tracked by the ministry, but a 43 percent rise in production from the auto sector accounted for two-thirds of the overall increase.
“Production is headed toward recovery, but the biggest reason behind the November 7.2 percent jump is mostly autos,” Itochu Research Institute economist Atsushi Takeda said. “Both Toyota and Honda have said they’ll return to usual levels of production by December, so we’re basically seeing that being backed up.”
Global output by Toyota Motor Corp last month bounced back to just 1 percent below last year’s level, the automaker said last week.
However, supply-chain woes might not be easy to shake off, with auto parts makers saying that logistics costs are likely to rise in the next fiscal year as suppliers turn to air freight to deliver parts that ships cannot transport due to ongoing pandemic-related snarls.
Japan has so far managed to avoid the kind of large-scale outbreak of Omicron seen in the US and the UK, but cases have been cropping up across the country.
Separate reports yesterday showed that Japan’s unemployment rate ticked up to 2.8 percent, rising for the first time since May, while a measure of demand for workers indicated that positions on offer still outnumbered job seekers.
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