Japan's 2022 industrial output falls 0.1% on weakening overseas demand

TOKYO (Kyodo) -- Japan's industrial output fell 0.1 percent in 2022 from the previous year, the first decline in two years, reflecting weakening overseas demand affected by tighter monetary policy in response to higher inflation, government data showed Tuesday.

The seasonally adjusted index of production at factories and mines in 2022 stood at 95.6 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report.

The October-December quarter saw the drop of 3.1 percent from the previous quarter, as a series of interest rate hikes overseas dampened investment appetite, a government official explained.

Output in April and May also declined, affected by a lockdown in Shanghai to contain coronavirus infections, although production bounced back the following month.

The annual index of industrial shipments dropped 0.3 percent to 93.4, while that of inventories gained 3.2 percent from the previous year to 100.9.

In December alone, production decreased 0.1 percent from the previous month to 95.4, following an upwardly revised 0.2 percent growth in November.

The ministry retained its basic assessment from the previous month that industrial production is "weakening."

Of the 15 industries covered by the survey, 10 logged output falls in the reporting month, four showed increases and one remained unchanged.

By sector, production of general-purpose and business-oriented machinery marked the biggest contraction of 6.0 percent from the previous month, led by boiler components and engines, contributing the most to the overall drop.

The output of inorganic and organic chemicals remained flat, while that of transport equipment excluding motor vehicles logged an increase of 4.5 percent, led by aircraft parts, data showed.

The index of industrial shipments also dropped 0.7 percent in December to 92.7 for the fourth consecutive month of decline, while that of inventories declined 0.5 percent to 103.1.

Based on a poll of manufacturers, the ministry expects output to remain flat in January and grow 4.1 percent in February.

"We still need to keep a close eye on the influence of a potential spread in coronavirus infections, material shortages and high prices," the official said.