Japan’s industrial output growth paused its rally in November after rising for five successive months. Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) indicated factory output was flat in November from the previous month. Despite the recovery in production and general machinery output on domestic demand, there was a steeper decline in the output of cars and plastic products in November.
Factory output is expected to decline 1.1pc in December amid volatile economic situations due to the spread of a new strain of COVID-19 in Europe and South Africa.
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In January 2021, the output could recover by 7.1pc, according to METI. After recovering sharply in the third quarter from record contraction in the second quarter, Japanese exports including steel and ferrous scrap are largely concentrated in the Asian region. Thus, exports are expected to maintain positive trends in the coming days.
A major factor driving Japan’s factory output was the recovery in global auto demand. Domestic demand was strong, but car output in November suffered from falling shipments to the US and Australia, a government official said.
Retail sales lowered in November while demand for Japan’s manufactured goods could take a hit amid slowing corporate and consumer activity in December. Capital goods sector could contribute mainly to the decrease in industrial output in December.