Ideas
Japan still seems to be a heavy industrial manufacturing economy even though, like most advanced economies has transitioned into a services and technology country.
With that said Japan still seems to think that manufacturing is the key to economic growth, next to China, its still heavily dependent on manufacturing and industrial development.
Because Japan is so heavily focused on the manufacturing of good its hasn't really developed much in terms of software as Japan still relies on the US for much of its software, which has become a major source challenge for the economy and businesses in Japan.
Auto production in Japan is an economic driver and at this time might be the only real economic driver that improves the economy.
And economic drivers is any economic activity that over the long-term improve the growth of the economy.
Some might say foreign tourism is another possible economic driver as it too has seen record number of foreign tourists going to Japan, but tourism, unfortunately is very susceptible to swings, as for example now there is the supposed boycott of Chinese tourists going to Japan, which China at one time used to be Japan's largest group, being next door to Japan.
The only thing that Japanese producers can do is endure the situation as maybe someday it can get back to some kind of normal or at least a new normal as the phrase was always used during the pandemic as a way to try to normalize the situation.
The tariff situation, unfortunately, is here for another three years and who knows what is going to happen exactly in the future, but companies need to just keep moving forward and stockholders and others just need to be aware that the profits of the companies they invest in might not get the same return as before.
Yes, uncertainty is always going to be there, even in the best of times as their always going to be potential pitfalls in demand, supply chains, material costs increasing and even government interference in some countries to name a few things.
All a company can do is assess the situation the best they can and keep moving forward with maybe focused on less growth or less profits as a way to get through the challenging times.
Inventories are both positive and negatives depending on which side of the coin you like, as for example a decrease in inventories could be demand for a companies products were higher than expected and or the estimate demand was not estimated correctly which happens some times.
And then there is the idea of too much inventory sitting in a company's warehouse or on the docks of a port such as LA or Long Beach in the US, as importers in the US or suppliers int he US don't need as much of the product but the company went ahead and continued to manufacture and send the product to the US hoping demand would change.
And at the same time, high levels of inventories has the potential too signal the beginning of some kind of recession as means for a product or products if it is sector wide might be a challenge for an economy.
The industrial output dropping to 101. 8 doesn't really mean much as there is not that much of a statistical variance other than maybe as December in Japan had a long year end holiday that might have been the reason for the drop in output.
But then again, the US tariff situation and the Chinese economy situation good be having an affect on production and manufacturing in Japan but even with a 2.7 percent drop in November its still not that significant yet.
Yes, production can and does fluctuate indecisively, as there always demand challenges, supply challenges with supply chain breakdowns, material costs increases, and equipment repairs and breakdowns at manufacturing plants.
As there are 15 industrial sectors, like an economy being highly complex, not all industrial sectors are going to be positive at the same time, as again, demand and supply chain challenges have a big say in how much is produced and what gets to the markets either in Japan or globally.
Hopefully, as again as car manufacturing in Japan is the main economic driver, demand for Japanese cars are still in high demand as the Japanese economy depends on the production and sale of cars.
And at the same time, its unfortunate, that Japan has been unable to develop any more significant economic drivers that can help move the economy forward, as it seems back into the late 80's or early 90's it seemed to almost give up being competitive in producing products that appealed to consumers globally.
Also has its very apparent South Korea, Taiwan, and China has replaced Japan as a producer of quality products wanted and needed by consumers globally, as Samsung in South Korea, Asus, and Acer in Taiwan, and now many Chinese quality products are being developed as it seems Japan just doesn't have the will to try and match these products these days that these countries produce.
Again, an economy is very complex and every sector or every industry is not going to be positive all the time as there are always going to be challenges related to demand and supply chain problems but a company has to learn how to overcome the challenges and at the same time but into place ways to overcome the scenarios when they do occur as no sector or no industry or no company is exempt from unexpected challenges.
The industrial shipments being at 98.7 is not really bad but its not really good too as maybe again, the Chinese economy situation and the US tariff situation could have affected the industrial shipment situation in Japan.
And again the inventory situation at 98.3 too is not good but also not bad and the Chinese situation and the US tariff situation might have reduced demand somewhat as maybe there were some supply chain challenges that reduced shipments and increased inventories at some companies in Japan.
Have a nice nice day!
