Japan’s output falls for second month as Iran war drags on
Wednesday's data suggest Japanese manufacturers may be feeling the impact of prolonged uncertainty surrounding the U.S. conflict with Iran.
Japan's industrial output declined for the second consecutive month, reflecting the strain on manufacturers due to the ongoing conflict in the Middle East. According to the industry ministry, production dropped by 1.7% in August compared to July, falling short of the 1.3% increase economists had anticipated. While output rose 3.4% from the previous year, this marked a significant slowdown compared to the 6.8% expected advance.
Several sectors experienced reduced output, notably cars, general-purpose and industrial machinery, and petroleum. However, transport equipment sales, excluding automobiles, grew during this period. The ministry's data also revealed that retail sales surged by 2.7% in August year-over-year.
The persistent uncertainty surrounding the U.S.-Iran conflict, coupled with the closure of the Strait of Hormuz and rising oil prices, has negatively affected Japanese manufacturers. These factors have led to supply-chain disruptions, adversely impacting companies operating within the country. Despite the Strait's potential reopening, the U.S. plans to release up to 40 million barrels of oil from its emergency reserve to address the situation.
In the meantime, Japan's relatively weak yen has provided some relief to exporters, partially mitigating the negative impact of the Middle East conflict. Strong demand for artificial intelligence (AI) has bolstered the tech industry, particularly, as companies adapt to the changing landscape. The ministry anticipates industrial production to recover in September and October, with forecasts of 3.2% and 3.1% growth, respectively.
The manufacturing Purchasing Managers' Index (PMI) gauge stood at 54.1 in September, indicating expansionary conditions. This metric has remained above 50 for all months, signifying continued growth in the sector. A recent report by PricewaterhouseCoopers projects that worldwide investment in data centers to meet the escalating demand for AI technologies will reach $31.6 trillion by 2050.
Written by urgent.news from Japan Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
Also reported by 2 other outlets
- Japan industrial output in August falls 1.7% on month on weak autos mainichi.jp
- Japan August factory output unexpectedly falls channelnewsasia.com
