Japan's factory output hit by car production cuts, Ukraine crisis adds to risks

Feb 28, 2022 | News On Japan

Feb 28, 2022 (CNA) - Japan's factory output shrank for the second month in January as the auto sector grappled with production suspensions due to the pandemic, with Russia's invasion of Ukraine intensifying pressure on an economy facing the risk of a contraction.

Even before the Ukraine crisis erupted, factories in the world's third-largest economy were struggling with global parts supply disruptions and coronavirus infections of the Omicron variant at home.

"Car output decreased substantially due to a worsening chip shortage and supply bottlenecks," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"That spilled over (into other industries such as) steel, which also fell."

Factory output slumped 1.3per cent in January from the previous month, official data showed on Monday, hurt by falling production of cars as well as declining iron, steel and non-ferrous metals.

That meant output extended declines to a second month, after slipping 1.0per cent in December, and came in weaker than a 0.7per cent loss forecast in a Reuters poll of economists.

Japanese car producers including Toyota Motor Corp and Suzuki Motor Corp have faced output cuts after being hit by supply chain disruptions and seeing pressure from a record surge in COVID-19 infections at home.

Monday's data showed output of cars and other motor vehicles slumped 17.2per cent from the previous month in January, falling for the first time in four months and pulling down the headline output figure by nearly 2.7 percentage points.

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