Econintersect: The slowdown in China is affecting its neighbors. Both South Korea and Japan saw Industrial Production declines in August from July. Japan had a month-over-month decline of 1.3% while South Korea slipped by 0.7%. This was the second negative month-over-month reading for Japan in a row and the dourth negatuve print in the last five months.
The South Korean decline was at least partky attributed to a strike by workers at auto maker Hyundai.
Observers believe that Japan will not be able to avoid a GDP contraction from this slowdown. From Bloomberg:
“I’m convinced we’ll see a contraction in Japan’s GDP this quarter because consumption, exports and private investment are falling,” said Masamichi Adachi, a senior economist at JPMorgan Securities in Tokyo and a former central bank official. “Prices in Japan are falling because the economy is weak.”
The following statements were released by Japan Ministry of Economy, Trade and Industry:
Industrial Production in August decreased 1.3% from the previous month, showing a decrease for the second consecutive month. It showed a decrease of 4.3% from the previous year. The index in August was 90.5(seasonally adjusted).
Industries that mainly contributed to the decrease are as follows: 1.Electronic parts and devices, 2.Information and communication electronics equipment, 3.Chemicals (excl. Drugs), in that order.
Commodities that mainly contributed to the decrease are as follows: 1.Metal oxide semiconductor ICs (Memory), 2.Large passenger cars, 3.Active matrix LCDs(Liquid Crystal Devices) Middle and small, in that order.
According to the Survey of Production Forecast in Manufacturing, Production is expected to decrease 2.9% in September and to be flat in October.
- Japan Heads for GDP Contraction as South Korea Weakens: Economy (Keiko Ujikane and Andy Sharp, Bloomberg, 28 September 2012)
- Preliminary Report for August, 2012 (Japan Ministry of Economy, Trade and Industry, 28 September 2012)