Japan’s industrial output in Aug. fell 3.2 percent from the previous month on weak auto production amid global chip shortages and disruption in supply chains. 

According to government data showed Thursday, Japan’s industrial output in August fell 3.2 percent from the previous month on weak auto production amid a global chip shortage and disruption in supply chains. 

The Ministry of Economy, Trade, and Industry said the recovery in industrial production “has paused” compared to August last year through July that output is “picking up.” It’s the first time the rating has been lowered since April 2020. 

According to a preliminary report from the ministry, the seasonally adjusted factory and mine production index fell to 95.0 from a 2015 high of 100 for the second month in a row. 

According to a ministry official, production in the car industry declined 15.2 percent from the previous month, attributed to a global semiconductor shortage as well as factory closures in Southeast Asia due to the spread of COVID-19, which disrupted the supply of auto components. 

Due to a shortage of chip and other component supplies, the output of electrical machinery and information and communication electronics equipment, such as laptop computers, was also down 10.6%. 

“The Auto Industry Looks Set to Face Harsh Headwinds for Months to Come.” 

Shunsuke Kobayashi, chief economist at the equity research department of Mizuho Securities Co. said that “The auto industry looks set to face harsh headwinds for months to come” 

According to Kobayashi reasons for a slower pace of economic revival are weak exports due to the impact of the virus situation in Asia and being forced to halt production lines.  

The industrial shipments index fell 3.8 percent to 92.7, while the inventory index fell 0.3 percent to 94.7. 

The projection, according to the ministry official, may not fully reflect the pandemic scenario and its impact on parts procurement. Toyota Motor Corp. and Honda Motor Co., two of the world’s largest automakers, have declared that they will continue to cut production in September and beyond.