Good morning and welcome to our continued coverage of the world economy, financial markets, the eurozone and business.
The global semiconductor shortage is hurting the growth of factories in Asia and is fueling delays in car deliveries in the UK.
Growth in From China Factories have fallen to a four-month low this month, new figures show, with supply shortages, supply chain problems and rising raw material costs weighing on manufacturers.
And in Japan, industrial production has recorded the largest monthly decline in a year, falling 5.9% in May compared to the previous month, affected by falls in the manufacture of automobiles and production machinery.
The fall was driven by a 19.4% drop in the production of motor vehicles, largely due to supply problems with semiconductor chips, said the Ministry of Economy, Trade and Industry (METI).
A slowdown in Japan’s auto industry will have a significant impact on its economy, as Reuters notes:
The [5.9%] The contraction, which was the first drop in three months, was much weaker than a 2.4% drop predicted in a Reuters poll of economists. It followed a 2.9% gain in the prior month.
Manufacturers of intermediate goods, such as passenger car tires and electric lighting, are being hit by the decline in motor vehicle production.
China’s official June Manufacturing Purchasing Managers Index (PMI), which tracks activity across the sector, fell to 50.9 from 51.0 in May, closer to the 50 point mark showing stagnation.
National Statistical Office of ChinaC senior statistician Zhao Qinghe It warned that production was affected by “a tight supply of chips, coal and power, as well as equipment maintenance,” adding that:
“Factors such as the shortage of chips have negatively affected the development of the (automobile) industry,”
The Covid-19 outbreaks at a key port in the main export province of Guangdong and in neighboring Shenzhen also caused disruptions.
The NBS also reported a slowdown in the growth of China’s service companies (the services PMI fell from 55.2 to 53.5)
Businesses have been warning for months that semiconductor shortages were hurting growth, and today’s data highlights the problem.
Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA, explains:
Stories of Chinese consumers saving rather than spending have been circulating for a while now, and it seems to be popping up in the data. Logistics and chips are making their presence felt in manufacturing.
Chips and ships will be a problem for the world as a whole for some time, and it could be that the initial spending frenzy to reopen the Northern Hemisphere has eased a bit.
Automakers are scrambling for semiconductors, competing with makers of electronics and electrical products, from televisions and cell phones to cars and game consoles.
Pendragon, the UK car dealer group, said this morning that supplies are likely to be affected in the second half of this year, with some orders already delayed.
Pendragon told the City that:
Uncertainty remains as we move into the second half of Fiscal Year 21 with potential additional Covid-19 disruptions, an expected realignment of used vehicle margins, and the risk of new and used vehicle supply restrictions.
While the extent of the impact of the widely publicized semiconductor chip shortage is still unclear, it is increasingly apparent that some supply constraints are likely during the second half of fiscal 21, and vehicle order times. they are already spreading. .
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George is Digismak’s reported cum editor with 13 years of experience in Journalism