January 5, 2023
As the prognosis for the world economy worsened, weak demand for machinery items caused Japanese firms to reduce output for a third consecutive month in November.
The poor production is bad news for Japanese businesses as they deal with mounting pressure to increase worker pay to combat inflation, which is considered as crucial to the post-pandemic expansion of the third-largest economy in the world.
Masato Koike, an economist at Sompo Institute Plus, stated that “the effects of offshore rate hikes, weaker GDP, and weak capital expenditure demand are progressively reaching Japan.”
Since the global economy hasn’t yet reached its worst point, production will unavoidably remain poor from October through December and very possibly stop further.
According to government data released, factory output decreased by 0.1% in November compared to the prior month, which was less than the market’s consensus estimate of a 0.3% reduction.
Following a revised 3.2% decline in October and a 1.7% contraction in September, that represented the third consecutive monthly decline in Japanese production.
The overall index fell in November as a result of a 7.9% decline in general machinery output and a 5.7% decline in production machinery output. Auto-related production decreased by 0.8% as well.
At a press conference, a representative of the Ministry of Economy, Trade and Industry (METI) stated that flat-panel display and semiconductor manufacturing equipment was in lesser demand in international markets like China, Europe, and North America.
Source: Reuters
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