Japan’s output slumps for second month due to quake, US-Iran war impacts

Japan’s industrial production fell for a second month after an earthquake disrupted operations in the nation’s south and as manufacturers continue to contend with higher costs stemming from the Middle East conflict.

Output decreased 1.7% in August from July, the Industry Ministry reported Wednesday. Economists had expected a 1.3% gain. Production increased 3.4% from a year earlier, compared with a consensus estimate of a 6.8% advance.

Industries posting declines in output included cars, general-purpose and industrial machinery and petroleum. Production of transport equipment excluding cars — including aircraft engine parts — increased.

Wednesday’s data likely were distorted somewhat by the effects of a magnitude 7.1 earthquake that struck Kumamoto, in southwest Japan, on July 28. Seismic activity continued for some time after the initial temblor, adding to the impact on supply chains in regions extending to Aichi Prefecture, home to Toyota Motor Corp.

“I think the decline was partly due to temporary factors, such as the impact of the Kumamoto earthquake and some production being halted because of natural disasters,” said Takeshi Minami, chief economist at the Norinchukin Research Institute. “I don’t think production has fallen off a cliff.”

“In the meantime, with tensions over Iran escalating again, if oil or energy shortages start to become more apparent in Europe and elsewhere toward the winter, I think it will be difficult to see production pick up going forward,” Minami said.

With the Strait of Hormuz remaining closed, elevated oil prices and supply-chain disruptions have weighed on Japanese companies. Iranian officials have privately expressed pessimism about reaching a deal to end hostilities and reopen the waterway before US midterm elections in November, according to people familiar with the matter.

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