Japan's factories extend output declines in Sept as supply disruptions weigh

TOKYO (Reuters) – Japan’s factory output shrank for the third straight month in September as production in the auto sector was hit by a global supply shortage, throwing the recovery in the world’s third-largest economy into doubt.

Output disruptions across Asia and slowing growth in China have clouded the outlook for Japan’s economy, which has depended heavily on exports to boost growth as the COVID-19 pandemic hurt domestic demand.

Factory production slumped 5.4% in September from the previous month, official data showed on Friday, hurt by falling output of cars as well as general-purpose machinery.

That meant output shrunk for the third consecutive month, after falling 3.6% in August and 1.5% in July.

It was the largest month-on-month decline since a 6.5% drop in May, and weaker than a 3.2% loss forecast in a Reuters poll of economists.

Seven out of eight Japanese automakers are seeing global output drop in September, as the global parts and chip shortage weighed on the sector.

Toyota Motor said on Thursday it saw global output slumping 39.1% in September from a year earlier, while cuts by automakers are also starting to affect suppliers.

Friday’s data showed output of cars and other motor vehicles lost 28.2% from the previous month in September, falling for the third straight month.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to gain 6.4% in October and 5.7% in November.

The government kept its assessment of stalled industrial production unchanged.

Separate data showed the jobless rate held steady from the previous month at 2.8%, while an index gauging job availability gained slightly to 1.16 from 1.14 in August.

Meanwhile, the core consumer price index for Tokyo, which includes oil products but excludes fresh food prices, rose 0.1% in October from a year earlier, up for a second straight month, government data showed on Friday.

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