Japan's Industrial Output Falls for Second Straight Month on Earthquake and Iran Tensions

Deep News
09/30

Japan's industrial production declined for a second consecutive month as an earthquake in the country's southern region disrupted manufacturing operations, while producers continued to grapple with elevated costs stemming from Middle East tensions.

Figures released Wednesday by Japan's Ministry of Economy, Trade and Industry showed that industrial output in August fell 1.7% compared with July, whereas economists had expected a 1.3% increase.

On a year-on-year basis, August industrial output rose 3.4% from the same period a year earlier, below the consensus forecast of a 6.8% gain.

Sectors that recorded output declines included automobiles, general machinery, industrial machinery and petroleum products. However, production of transport equipment excluding automobiles, including aircraft engine parts, increased.

The data released Wednesday were partly affected by the magnitude-7.1 earthquake that struck Kumamoto Prefecture in southwestern Japan on July 28. Aftershock activity persisted for some time after the initial tremors, further intensifying the strain on supply chains, with the impact even reaching Aichi Prefecture, where Toyota Motor Corp. is based.

"I think the decline is partly attributable to temporary factors, such as the impact of the Kumamoto earthquake and the halting of some production activities due to natural disasters. I don't think industrial production has fallen off a cliff," said Takeshi Minami, chief economist at Norinchukin Research Institute.

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