[Asia Economy Reporter Jeong Hyunjin] Japan's industrial production, which indicates the business conditions of manufacturing and other sectors, fell by 7.2% month-on-month in May, marking the largest decline in two years.
According to reports from Japan's Nihon Keizai Shimbun and Bloomberg on the 30th, the Ministry of Economy, Trade and Industry of Japan announced that the preliminary industrial production index for May (2015=100, seasonally adjusted) stood at 88.3. This index level is the lowest since August 2020, and the decline rate is the largest since May 2020.
Japan's industrial production index recorded a negative figure for two consecutive months. The lockdown measures in China to prevent the spread of COVID-19 caused stagnation in production and logistics, which in turn affected Japan's industrial production. In particular, difficulties in procuring parts led to sluggish production of automobiles and other products. Initially, Bloomberg had expected the decline in the May industrial production index to be only 0.3%, but the impact of China's lockdown was greater than anticipated, resulting in a larger drop.
By industry, 13 out of 15 industrial sectors recorded negative production growth. The automobile industry led the overall decline in the industrial production index with an 8.0% drop due to decreased production of trucks and passenger cars. The electrical and information communication machinery industry fell by 11.3%, and the production machinery industry decreased by 5.1%.
However, the Ministry of Economy, Trade and Industry projected that the production forecast index, calculated based on major companies' production plans, will rise by 12% in June and 2.5% in July compared to the previous month. This reflects the partial easing of COVID-19 lockdown measures in China starting this month. Nevertheless, Nihon Keizai Shimbun reported that uncertainties remain in the forecast as supply constraints are expected to ease gradually.
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