Production at the Japanese factory in November has risen as car production has risen, according to Reuters

By Daniel Leussink

TOKYO (Reuters) – Production at Japanese factories rose in November as production in the auto sector benefited from a recovery in global parts supply, boosting the chances of a strong economic rebound in the fourth quarter.

Despite the rise in production, Japanese manufacturing forecasts remained cloudy due to the risk of a slowdown in foreign activity due to the resurgence of the coronavirus pandemic and the continuing shortage of global chip supply.

Production at the factory rose by 7.2% in November compared to the previous month, with the highest increase since comparable data was available in 2013, thanks to the increase in the production of motor vehicles and plastic products.

This means that production rose for the second month in a row after rising by 1.8% in October and rising faster than the 4.8% profit forecast in a Reuters survey of economists.

“The output has been restored to its former location as car production has revived,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“But from a global perspective, supply shortages and, above all, chip shortages will be extended, so the pace of production recovery will slow down.”

Data show that production of cars and other motor vehicles rose by 43.1% in November compared to the previous month, the most comparable figure since they were available eight years ago, and that of plastic products rose by 9.5%.

Despite stronger production, Japanese automakers are still unable to fully shake up the drag on global durable parts and chip supply problems.

Japan’s leading car manufacturer Toyota Motor (NYSE 🙂 Corp. said last week it would suspend production in five domestic factories in January due to supply problems and a health crisis.

Manufacturers expected production to rise by 1.6% in December and 5.0% in January. But the forecast for companies in the survey is often too optimistic, according to an official from the Ministry of Economy, Trade and Industry (METI) who warned that production will be positive this month.

The government renewed its assessment of industrial production, saying there were signs of an increase.

Separate data showed that the unemployment rate rose to 2.8% from 2.7% in the previous month, and the employment availability index stood at 1.15, unchanged from October.