Japan’s factory output surged in November as production in the auto sector benefited from a recovery in global parts supplies, lifting prospects for a strong fourth-quarter economic rebound.
Despite the output jump, the Japanese manufacturing outlook remained clouded by the risk of slowing overseas activity due to a resurgence of the coronavirus pandemic and a persistent shortage in global chip supplies.
Factory production gained 7.2% in November from the previous month, posting its largest jump since 2013 when comparable data first became available, thanks to rising output of motor vehicles and plastic products.
That meant production rose for the second straight month after increasing 1.8% in October and posted a faster rise than the 4.8% gain forecast in a Reuters poll of economists.
“Output recovered to where it was previously because car production rebounded,” Takeshi Minami, chief economist at Norinchukin Research Institute, said.
Supply bottlenecks
“But seen from a global perspective, supply bottlenecks and especially the chip shortage are likely to be prolonged so that will slow down the recovery pace of output.”
The data showed output of cars and other motor vehicles surged 43% from the previous month in November, also the most since comparable figures became available eight years ago, while that of plastic products rose 9.5%.
Despite the stronger output, Japanese automakers are still unable to completely shake off the drag from persistent global parts and chip supply issues.
Japan’s top automaker Toyota Motor Corp said last week it would suspend production at five domestic factories in January due to supply issues and the health crisis.
Manufacturers expected output to gain 1.6% in December and 5.0% in January. But forecasts by firms in the survey tend to be overly optimistic, a Ministry of Economy, Trade and Industry (METI) official cautioned adding that it remained to be seen whether production will come in positive this month.
The government upgraded its assessment of industrial output, saying it was showing signs of picking up.
Separate data showed the jobless rate rose to 2.8% from the previous month’s 2.7%, while an index gauging job availability was at 1.15, unchanged from October.
- Reuters with additional editing by Jim Pollard
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