Japanese factories began posting their first increase in production in three months in February as global demand led to a rebound in auto production.
However, the increase was smaller than market expectations, underscoring the lingering impact of supply chain bottlenecks and other risks such as soaring raw material costs.
Citing Reuters (31/3), factory production rose 0.1% in February from the previous month due to growth in production of cars and transportation equipment. The gains were weaker than the 0.5% gain forecast in a Reuters poll of economists.
The gain means output is returning to growth after slipping 0.8% in January and 1.0% last December.
Data showed production of cars and other motor vehicles rose 10.9% from the previous month in February, rebounding after a sharp contraction in January as pressure from parts shortages eased.
Unfortunately, the outlook for the world's third largest economy has weakened after energy and commodity prices soared following Russia's invasion of Ukraine last month. Raw material prices soared, burdening exporters with higher input costs, while supply chain disruptions escalated.
"The situation in Ukraine is likely to exacerbate the spare parts shortage further. There is a risk that output recovery will be delayed further." said Takumi Tsunoda, senior economist at Shinkin Central Bank Research.
Japanese automakers and suppliers are also facing headwinds from coronavirus-related disruptions in China, the world's biggest market.
Tom Learmouth, Japan economist at Capital Economics said Japanese companies' production plans for the next few months were increasingly too optimistic. However, he highlighted the possible risks that will occur in the next quarter.
"New headwinds from potential supply chain disruptions in Russia and China could hold the hand brake on Japanese industrial production, pushing back any rebound through the end of the year." he said.
Subscribe Daily Post or Follow Google News to update information quickly, Thank you..!!
