Japan's September Industrial Production Index Falls for 3 Consecutive Months... Down 5.4% from Previous Month

Record of 89.5... Dropping Below 90 for the First Time in 13 Months
Caused by Semiconductor Supply Shortage and Southeast Asia Parts Procurement Delays

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Japan's key economic indicator for industrial production in September fell sharply by more than 5% compared to the previous month, marking a decline for the third consecutive month. This is attributed to the global semiconductor supply issues and factory closures in Southeast Asia due to the COVID-19 pandemic, which have made parts procurement difficult, intensifying the production slump centered on the automobile industry.

On the 29th, Japan's Ministry of Economy, Trade and Industry announced that the industrial production index for September dropped 5.4% from the previous month to 89.5. This figure marks a decline for three consecutive months and is the first time in 13 months since August last year that the index fell below 90. The index is calculated with the 2015 industrial production index set as the baseline of 100 and reflects the production status of 15 major Japanese industries, including automobile manufacturing, electrical machinery, and mining.

According to Nihon Keizai Shimbun (Nikkei), the sector showing the most significant contraction in this industrial production index was the automobile industry, which plummeted by 28.2% compared to the previous month. Nikkei explained that this is due to the global semiconductor supply issues combined with factory operating days being reduced in Southeast Asian countries, which are major parts suppliers for Japanese automobile manufacturers, as a result of closure measures amid the spread of COVID-19 variants.

The industrial production index for the third quarter of this year, including the figures from July to September, was 94.1, down 3.7% from the previous quarter. This marks the first negative growth in five quarters since the second quarter of last year, when the COVID-19 spread was severe. The quarterly industrial production index had been rising continuously since it fell 16.8% in the second quarter of last year.

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