The depressed car industry continues to wreak havoc on the slumping Japanese economy with figures yesterday showing it was the main driver behind the 5th successive monthly fall in industrial output in February.
Preliminary figures from the country’s Industry and Economy Ministry revealed industrial production fell 9.4% last month, a bit better than the record 10.2% in the revised figures for January. It was also lower than December’s fall of around 9.5%.
But the annual rate of fall accelerated, reaching more than 38% for the year to the end of February, from the annual rate of 31% for the year to January.
The ministry said products that contributed to the fall were:
- Large passenger cars,
- Small passenger cars,
- Chassis and Body parts, in that order.
Industries that mainly contributed to the decrease are as follows:
- Transport equipment,
- General machinery,
- Electrical machinery, in that order.
With the Japanese financial year ending tomorrow, the Ministry is predicting an improvement with small rises forecast for March and April.
Industries that mainly contributed to the increase in March are as follows:
- Transport equipment,
- Chemicals,
- Electrical machinery, in that order.
Industries that mainly contributed to the increase in April are as follows:
- Chemicals,
- Transport equipment,
- Electronic parts and devices, in that order.
Inventories fell an unprecedented 4.2% in February, but like in the US, that has raised hopes that companies will increase production as they begin to replenish stocks.
That of course assumes demand is there and that suppliers haven’t merely cut production and stocks to match the lower level of purchases (real and prospective) coming from retailers, wholesalers and other buyers in Japan and offshore.
"According to the Survey of Production Forecast in Manufacturing, Production is expected to increase 2.9% in March and to increase 3.1% in April," the Ministry said in a statement.
In the early forecast for February, the Department predicted a 8.3% fall in output, which was surpassed. That doesn’t look good for the small rises for this month and April.
But some companies in the steel, car and other parts of the metals industry have said they will raise output next month to start rebuilding stocks and to meet an expected upturn in orders.
But the key remains the electronics industry: from corporate to consumer products where the just in time supply pipeline has been badly hurt by the downturn in China, Japan, Taiwan, Singapore, Hong Kong and South Korea.
That level of interdependency has seen similar sized falls in output and exports across East Asia since November as the supply [pipelines have become choked with unwanted stocks and then frozen as exports to the US and Europe of finished goods have stalled, and then plunged.
But there are more signs now of an improvement in the June quarter than the three months that finishes today.
