MNI BRIEF: BOJ View Tested As Japan's Oct Factory Output Falls
The Bank of Japan's outlook for higher industrial production has been challenged by a 2.6% m/m decline in October industrial production caused by slowing global growth, preliminary data released Wednesday by the Ministry of Economy, Trade and Industry showed.
The decrease followed a 1.7% m/m fall in September and was due to weaker production of production machinery, which fell 5.4% compared to a 1.8% fall in September, and a contraction in electronic parts and devices of 4.1% in October, down from 0.4% growth in September. Industrial production rose 5.8% q/q in the third quarter, marking the first rise in two quarters.
Motor vehicles production posted the first rise in three months, climbing 5.6% m/m in October - a weak rebound from September's 12.4% decline - showing production continues to be affected by the shortage of semiconductors.
The METI lowered its assessment from September, saying industrial production had recovered moderately but “showed signs of weakness in part.” Based on its survey of manufacturers, METI projected that industrial production would rise 3.3% on month in November (revised up from expected growth of 0.8% forecast last month) and rise 2.4% in December. Adjusting the upward bias in output plans, METI's forecast production would fall 0.8% m/m in November.
The BOJ is worried slowing global growth will hurt automobile and capital goods exports due to order order cancellations and adjustments in IT-related goods.