Factory production in Japan recorded its biggest monthly decline in two years in May, as China’s coronavirus lockdowns and shortages of semiconductors and other spare parts hit manufacturers, intensifying pressure on an economy that is struggling to sustain a strong recovery.
The downturn also highlights the challenge facing the world’s third-largest economy as it struggles to overcome supply problems and persistently high commodity and energy prices, which analysts say could weaken global demand.
Factory production fell on a seasonally adjusted basis by 7.2% in May compared to the previous month, according to official data, as production from cars to electrical and special purpose machinery fell sharply.
The decline, which marks the largest on a monthly basis after -10.5% in May 2020, was much higher than the -0.3% expected by economists.
“The drop in industrial production in May suggests that Japan’s recovery is once again disappointing,” said an analyst at Capital Economics.
“The conventional wisdom is that supply problems are the main culprit. However, the fact that stocks were generally stable despite the slump in production suggests that weak demand plays a role,” he added.
The figures come a day after Toyota Motor, the world’s largest automaker in terms of sales, announced it had failed to meet its already reduced target for global production in May.
Toyota produced 634,940 vehicles worldwide last month compared to its target of about 700,000, which it had cut by 50,000 from 750,000 in mid-April due to restrictions on the Shanghai pandemic.
Source: Capital
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