Shortages, shipping, shutdowns hit Asian factory output

Shortages of power, computer chips and other parts, soaring shipping costs and shutdowns of factories to battle the pandemic are taking a toll on Asian economies.

Data released Thursday showed Japan’s factory output slowed while China’s manufacturing outlook weakened.

Japan’s Suzuki Motor Corp. became the latest automaker to idle production lines for a few extra days due to shortfalls in components.

While Japan and some other countries are beginning to ease out of emergency measures to curb the spread of the coronavirus, others are having to reimpose such precautions, adding to uncertainty over the outlook for regional and global growth.

Factory output in Japan fell in August by 3.2% from the month before, as pandemic-related shutdowns hit manufacturers across Asia. That followed a 1.5% decline in July.

Automakers and producers of IT products and other electrical machinery were the hardest hit, the government reported.

Suzuki said it expected to suspend operations at a factory in central Japan for an extra three days and to do the same two days at another factory.

Other automakers also have slowed operations, citing shortages of computer chips and other parts.

Retail sales fell a much worse than expected 4.1% from a month earlier due to weak demand for clothing and appliances.

While there are signs of improvement in some parts of Asia, “fresh peaks for new daily cases in some countries and relatively slow progress in vaccination rollouts in Southeast Asia mean the risks of semiconductor and other component shortages could persist for an extended period," Harumi Taguchi of IHS Markit said in a commentary.

In another sign of slowing activity, an official survey of factory managers showed Chinese manufacturing slowing in August.

The manufacturing purchasing managers index, or PMI, fell from 50.1 in August to 49.6 in September on a 0-100 scale where 50 marks the break between expansion and contraction.

The survey was conducted before power shortages began causing factories in some parts of China to begin suspending operations.

The weakest readings were in energy intensive areas such as chemicals and metals, Julian Evans-Pritchard of Capital Economics said in a report.

“Respondents to the surveys noted that material shortages and transportation delays were still holding back output," he said.

Surging demand for computers and other equipment for remote work has strained supplies of the microchips that run them.

Shortages of shipping containers and occasional shutdowns of ports due to COVID-19 outbreaks also have caused bottlenecks throughout global supply chains.

“Chinese and South-east Asian ports are still suffering the consequences of those earlier closures, with record queues of ships waiting to unload," Rabobank said in a report on the shipping industry.

It estimated that 10% of global container capacity was waiting offshore for unloading.