• Kyodo

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Japan’s industrial production rose 3.8% in October from the previous month, gaining for the fifth straight month, supported by a recovery in demand for machinery and autos from a pandemic-induced slump, government data showed Monday.

The readings in the reported month showed that output in some sectors has returned to levels before the spread of the novel coronavirus but the industry ministry warned of downside risks going forward due to the recent resurgence of infections globally.

The seasonally adjusted index of output at factories and mines stood at 95.0 against the base of 100 for 2015, the Economy, Trade and Industry Ministry said in a preliminary report. The result followed a downwardly revised 3.9% increase in September.

A 17.9% increase in the production of general machinery, including conveyer systems in the retail sector and steam turbines used for electricity generation, as well as a 6.8% gain in auto production on the back of firm exports contributed to the overall output rise, the data showed.

The electrical machinery and information and communication electronics equipment sector saw an 8.4% increase, propelled by a boost in demand for computers used in remote working to curb the spread of the virus.

A ministry official said the ministry is closely watching how the recent resurgence of coronavirus infections will affect manufacturing activities in the coming months, noting “downside risks” to both domestic and overseas economies.

Manufacturers polled by the ministry said they expect output to rise 2.7% in November but fall 2.4% in December.

The ministry retained its assessment for October, saying industrial output is “picking up.”

“It will still take time for the index to recover to the pre-pandemic mark of 99.8 in January” despite the production levels of autos and electrical machinery and information and communication electronics equipment returning to levels before the coronavirus outbreak, the official said.

Looking ahead, Takeshi Minami, chief economist at the Norinchukin Research Institute, said that the upward momentum of industrial output will not last for a long time.

“The preliminary reading for October showed a recovery but as the regions in the northern hemisphere face the winter season and the coronavirus pandemic is expected to spread, the pace of economic recovery will likely slow down,” Minami said.

“The index is expected to fluctuate also as an increase in auto production, which has been one of the contributors to the output boost in recent months, is forecast to decrease in November and December,” he said.

In October, the index of industrial shipments climbed 4.6% to 94.7 while that of inventories was down 1.6% to 95.9.

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