Japan’s manufacturing at 10-month low in July on auto parts shortage, rising costs – S&P Global

August 27, 2022 by No Comments

Japan’s manufacturing sector slowed in July, as the au Jibun Bank Japan purchasing managers’ index compiled by S&P Global Commodity Insights dipped to 52.1 from 52.7 in June, the data showed Aug. 1.

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Although the PMI remained in expansion territory, the reading was the lowest in 10 months, as domestic production and new orders showed declines at the start of the third quarter, which local companies attributed to “rising inflationary pressures and raw material shortages.”

Shortage of parts have resulted in local automakers cutting their production forecasts in Q3. Toyota Motor Corp.’s reduced its production outlook by about 58,000 vehicles for July and by about 150,000 vehicles in August.

The outlook for Q3 steel demand looks bearish as Japan’s Ministry of Economy, Trade and Industry projected July 14 that the third-quarter steel products demand is expected to slip 1.8% on the year to 20.96 million mt amid market uncertainty stemming from Russia’s invasion of Ukraine, the pandemic and volatility in the prices of raw materials.

The COVID-19 pandemic has raised market concerns that economic activity could slow down as cases reached an all-time high of 233,066 cases on July 28, data from Japan’s Ministry of Health, Labour and Welfare showed.

The rise in coronavirus cases has also impacted domestic automakers. Toyota Motor suspended production at its No. 1 production line located at its Takaoka plant on July 26 and July 27 for the second shifts after workers at the plant tested positive.

“S&P Global had estimates that industrial production will rise only 0.2% in 2022, meaning that output lost to the pandemic is unlikely to be recovered until the start of 2024,” said Usamah Bhatti, an economist at S&P Global Market Intelligence.

Source: https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/metals/080122-japans-manufacturing-at-10-month-low-in-july-on-auto-parts-shortage-rising-costs

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