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Japan's July output falls 1.5% amid chip shortage, pandemic in Asia

In this Sept. 29, 2020, file photo, cars wait to be exported at Yokohama port, near Tokyo. Japan's exports in July jumped 37% from a year ago, the government said on Aug. 18, 2021, highlighting an overseas recovery from the coronavirus pandemic. (AP Photo/Koji Sasahara)

TOKYO (Kyodo) -- Japan's industrial output dropped 1.5 percent in July from the previous month due to the prolonging global chip shortage and the disruption in the supply of parts caused by the coronavirus pandemic in other Asian countries, government data showed Tuesday.

    The seasonally adjusted index of production at factories and mines stood at 98.1 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report. The results followed an upwardly revised 6.5 percent rise in June and a 6.5 percent fall in May.

    In July, production in the auto industry declined 3.1 percent from a month earlier as passenger car production dropped, and output in the electrical machinery and information and communication electronics sector fell 3.4 percent due to weak production of lithium-ion batteries and air conditioners.

    "The sectors are experiencing a major disruption in the supply of parts, especially from Southeast Asia, due to restrictions in economic activities" stemming from surges in coronavirus infections, a ministry official said.

    The official also said production of automobiles and air conditioners were affected by the chip shortage.

    The production machinery sector rose 1.6 percent, however, thanks to robust domestic and foreign demands for machines to manufacture semiconductors.

    The ministry maintained its basic assessment that industrial production is "picking up."

    The index of industrial shipments decreased 0.6 percent to 96.1 while that of inventories was down 0.6 percent at 95.1.

    Looking ahead, manufacturers polled by the ministry expect output to gain 3.4 percent in August and 1.0 percent in September.

    "Despite the fall this month, we expect output levels will remain relatively high," the ministry official said, though adding that the recent expansion in virus cases in other Asian countries may not have been factored in in the survey conducted in early August.

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