Japan’s industrial output rose 6.2% on month in June

Japan’s industrial output rose 6.2% in June from the previous month, surpassing the level before the coronavirus pandemic, buoyed by a recovery in production of autos and semiconductor-making equipment, government data showed Friday.

The seasonally adjusted index of production at factories and mines stood at 99.3 against the 2015 base of 100, above the 99.1 posted in January 2020 and topping the figure for the second time since April this year, the Economy, Trade and Industry Ministry said in a preliminary report.

The result followed a downwardly revised 6.5% drop in May.

In the reported month, production in the auto industry including vehicles, steering devices and engines surged 22.6% from a month earlier, making it the biggest contributor to the index’s rise.

“Although the global chip shortage continues to weigh, automakers and related manufacturers increased their production to address a sharp rise in demand,” after the sector’s May factory activity dropped 19.4%, a ministry official said.

An 8.9% increase in production machinery on the back of growing in demand for chip-making equipment also helped push up the output index as a whole.

The ministry maintained the assessment, saying industrial output is “picking up.”

Meanwhile, production of transportation equipment excluding motor vehicles declined 7.2% in the month.

The index of industrial shipments increased 4.3% to 96.3 while that of inventories was up 2.3% at 95.9.

Based on a poll of manufacturers, the ministry expects output to fall 1.1% in July and rise 1.7% in August.

“Although there are ups and downs, it is expected that the uptrend will continue.” the official said.

But he also pointed to downside risks deriving from the impact of the spread of highly contagious new variants of the coronavirus in Japan and abroad as well as the prolonged shortage of semiconductors on auto production.