Reuters: March Economic Data:

https://the-japan-news.com/news/article/0006521308

Article:

TOKYO (Reuters) — Japan’s March factory output fell at the fastest pace in five months, while retail sales also dropped as businesses struggled with the coronavirus pandemic’s sharp hit to overseas and domestic demand.

The global economy could suffer its worst downturn this year since the Great Depression of the 1930s due to a virus-driven collapse of activity, with Japan’s economy facing stagnation due to its export dependence and soft domestic consumption.

Official data on Thursday showed factory output slipped 3.7% in March from the previous month, a smaller decline than the 5.2% drop in a Reuters forecast.

The reading marked the sharpest fall in production since October last year, and followed a downwardly revised 0.3% drop in the previous month.

Ideas: 

Even a 3.7 percent decline is not good but at least it wasn't 5.2 percent. Stagnation is a significant challenge to overcome. Exports are really only about 20 percent of Japan's GDP, but large enough to have a significant affect if there are export declines. Domestic or consumer spending might be as much as 60 percent or more of Japanese GDP. And it has always been a major challenge to it moving up. Even when the Bank of Japan tried to target inflation to get it to increase to 2.0 percent, it was always dependent on increasing consumer spending or increasing consumer demand to get prices to go up. But ultimately the BOJ has failed so far to increase inflation. 

Article:

“Though China’s economy picked up slightly in March, the virus outbreak spread in other countries leading to a stalling of economic activity,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

Automakers and machinery manufacturers suffered output declines due to slower demand for parts and equipment from factories overseas, including China.

“Inventories were at a level not seen since April 2009, when the global economy was still recovering from the ‘Lehman Shock’. I think there will be considerable production adjustments,” said Minami.

The data showed inventories in March jumped 8.5% from the previous month, while shipments sank 5.0%, their biggest decline since comparable data became available in 2013.

The government downgraded its assessment of output conditions to say they are dropping.

Ideas:

China's economy may have picked up slightly but that might not be much considering the size of the economy. And it might not be much if the correct or needed parts of the economy didn't pick up. 

Inventory increases and decreases are always a major concern. If the inventory level is too low, it might be good idea that demand is up and companies are unable to keep up with demand. So maybe now inventories or face masks might be down or low in stores or some stores because there is a lot of demand and companies are unable to keep with the demand for face masks.

The same can be said if demand is low. Then of course inventories will be begin to increase.  And what might happen is companies begin to reduce prices to try and reduce the unwanted inventory. Which is most likely might be for some companies and industries during the crisis now.

Article:

Manufacturers surveyed by the government expect output to rise 1.4% in April and drop 1.4% in May, the data showed, though manufacturers’ forecasts for future production have historically been on the high side.

“There’s a high possibility output may also decline in April considering that manufacturers have not fully taken into account the impact of the coronavirus outbreak,” a trade ministry official said.

Ideas:

Yes most likely output has declined in April and supply chains struggle and demand for products are decreasing.  And yes, sometimes forecast might be on the positive side as no one has expected the current situation to last as long as it has. 

Companies do not operate in a vacuum. They are interconnected with their supply chains meaning if they can't get the parts and supplies they need they can't do business or keep the same output. And then the ideas of demand from customers is always there or not there these days.

Article:

RETAIL SLUMP

Separate data showed retail sales tumbled at their fastest pace since last October’s sales tax hike as the outbreak forced department stores to shut their doors and consumers to cut spending.

Retail sales slumped 4.6% in March from a year earlier, pulled down by tumbling demand for general merchandise and clothing as well as plunging department store sales.

Sales of household appliances, such as refrigerators and washing machines, as well as smartphones were also weak, another trade ministry official said.

The fall in retail sales confirms that the recovery in spending from the tax hike “has been completely derailed by corona containment,” said Tom Learmouth, Japan economist at Capital Economics.

Ideas:

A decrease in retail sales was not unexpected.  However, to be somewhat positive, a 4.6 percent decrease could have been worse. Its quite possible that binge shopping and online retail sales might have lessened the decrease. And if we look closely we might see an increase in some items or many items that consumer felt were/are important during the virus crisis.

The October sales tax increase affect might have been long gone by March if all things were normal or equal. But as we know, all things are no equal or normal. Meaning basically by March consumers would have gotten used to the sales tax increase and gone back, somewhat, to their normal spending patterns. 

Article:

A Cabinet Office survey released on Thursday showed consumer confidence hit a record low in April, damaged by the coronavirus pandemic and social distancing policies.

The government downgraded its view on the consumer sentiment index, saying it was worsening quickly.

Japan was already struggling with weak demand before the outbreak after the government raised the sales tax to fix its heavy public debt burden, which is more than twice the size of the gross domestic product.

The economy shrank an annualized 7.1% in the three months through December due to the hit from the U.S.-China trade war and the sales tax hike.

Ideas:

Consumer confidence is used mostly to measure or understand the feelings or mood of consumes and what they think they might do in the future related to spending. Its not surprising that consumer confidence is down.

But look at it in a different way. Why is it really down? How much of it has to do with the sales tax increase? How much of it has to with the threat of the virus? How much of it has to do with the shortage of some needed products including some essential food? How much of it is related to social distancing? And now much of it is just the fear of the unknown in the future?

Even though the economy shrank,it was expected to return to some kind of normal during the winter. But of course that has not happened.

Article:

The soft batch of data comes as Japan’s parliament is set to approve on Thursday a $241 billion supplementary budget to fund a record stimulus package featuring cash payouts to every citizen to offset the widening economic hit.

The move will come on the back of expanded stimulus from the Bank of Japan, which earlier this week rolled out fresh steps to ease corporate funding strains and pledged to buy unlimited amounts of bonds to keep borrowing costs low.

Official data on Tuesday showed the widening hit to the jobs market from the outbreak. The March jobless rate rose to its highest in a year, while job availability slipped to a more than three-year low. Speech.

Ideas:

Yes the Japanese government and the Bank of Japan need to work together to get as much aid as needed into the economy. The government part of GDP needs to increase significantly like when Keynes had the UK government increase spending during the great depression and WWII to overcome the depression. While it might be only temporary, whatever is needed the government needs to do to offset the loses in consumer spending and business spending.

Have a nice day and stay safe!

© 2020, Tom Metts, all rights reserved

Hakone Ekiden: You Tube: The Enjoyment of Running in Japan!

https://www.youtube.com/watch?v=xB67rHOQ-K0

I love this video of the Hakone ekiden. What I really like about it is the sportsmanship the friendship among all the runners from the teams as they talk to each other in the waiting or warm up areas where the relay exchanges are. This just shows that sports doesn't have to be an all or nothing situation. You can show kindness, friendship, and sportsmanship and still get out there to run your best. We need to see videos like this in this difficult time.

What it is also shows that as the runners are preparing and or finished, except for a few, they are smiling and happy and enjoyed the pursuit of doing their best. It also shows is that it is not a win or nothing situation that the media and all make it out to be. The athletes themselves, in the heat of the battle, have a completely different perspective than what the rest of us think.

I think what is very interesting, those teams that did not finish in the top ten of course have to try and qualify next October to run Hakone again. But, for the most part, they don't look devastated or totally unhappy. They gave their best, the enjoyment of running. They will try again to qualify next October, if all is OK, considering the present situation. They are probably again, for the most part, feel fortunate to have been able to run Hakone. For most it is their one and only chance.

Yes there is the occasional crying here or there, either from the idea they didn't run their best and or didn't help the team win or place in the top ten. Also the idea that maybe they had the chance to run Hakone and maybe it is their last time doing it.

Also there are maybe 50+ teams in the Kanto area, as only 20 can run it. So they maybe are very grateful to have had the chance to run Hakone, once in their running life.

Growth in Some Industries: How about in Japan Too?

https://www.researchandmarkets.com/issues/covid-19?utm_medium=CI&utm_source=covid19&utm_campaign=cils16

Comments and Ideas:
In a market economy there are always going to be some industries, at any one time, that do better than others. There are always going to be some companies, at any time, are always going to do better than others.

The virus situation or any situation, is always going to see innovations, new products, new services, and even new industries emerge. And of course, unfortunately, the opposite. As we see already, there are many challenges to economies around the world. Japan is no different. But now many of the industries listed in the article are now growing.

Most likely there are large increases in online shopping/buying. Maybe even new companies beginning to emerge. Most likely restaurants are now beginning to offer delivery type services.

They don't have to use or employ their own delivery workers. They can use a delivery service that has an app and when an delivery order comes to the restaurant, the delivery service comes and picks up the order and delivers it for the restaurant.

It works for everyone, the customer, the restaurant, and the delivery service.

And most likely even more innovations in the Japanese economy and society are developing now, as the situation becomes challenging.

Reuters: Japan Wholesale Prices:

https://www.yahoo.com/finance/news/japans-wholesale-prices-mark-first-020108996.html

Article:

TOKYO (Reuters) - Japan's wholesale prices marked the first annual decline in five months in March, suggesting that slumping global demand for oil and raw material due to the coronavirus pandemic will weigh on inflation in coming months.

The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, fell 0.4% in March from a year earlier, Bank of Japan (BOJ) data showed on Friday.

Ideas:

March of 2020 was probably the where most businesses saw a decrease in demand and especially a decrease in global demand.

And most likely the first signs of the global supply challenges that effected much of business globally.

For example, if you tried to order something on Amazon in the US to another country the wait was twice and three times longer than normal.

And then you add in the need for raw materials and other supply sources needed by companies the global logistics challenges were quite large starting most likely in March.

Article:

The drop was bigger than a median market forecast for a 0.1% decline and followed a 0.8% rise in February. It was the first year-on-year fall since last October, when prices fell 0.3%.

Prices of oil and coal prices fell 10.3% in March from a year earlier, while those of non-ferrous metal goods were down 7.6%, the data showed.

Wholesale prices, considered a leading indicator for consumer inflation, have been under pressure from slumping oil and metal costs as the pandemic paralyses global economic activity.

Ideas:

Global oil supplies are always under some kind of pressure because of its volatility meaning prices are always changing and sometimes change very fast.

As a result those who need the oil, such as businesses, and those who are suppliers, but not the producers are always under constant pressure as to what the global oil market is going to do.

And as both business and consumer demand begins to decrease because of the pandemic, those in the supply chain might be reluctant to increase prices if their supply and resource prices increases due to decreasing demand in the markets they are in.

Article:

The data heightens the chance the BOJ will cut its consumer inflation forecasts when it conducts a quarterly review of its projections at its April 27-28 policy meeting.

Under its current forecasts made in January, the BOJ expects core consumer inflation to hit 1.0% in the fiscal year that began in April, remaining distant from its 2% target.

Sources have told Reuters the BOJ is likely to make a rare projection this month that the world's third-largest economy will shrink this year as the pandemic threatens to push the country deep into recession.  

Ideas:

The Bank of Japan has been trying to get inflation to the 2 percent level since about 2014 with no success.

Yes if inflation does get to the 2 percent level, that is a good indication that there might be a good level of economic activity in the economy, especially consumer spending which makes up about 50 percent of Japan's GDP.

But that is not the only idea. There is the idea of supplier costs or company costs and passing on the costs to the next in line. Companies seem to be somewhat reluctant to pass on the increase in their supply costs and they are always hesitant because of what consumers might think.

So what do they do maybe to make sure they keep the same profit margin despite an increase in supply costs? They might not give any salary increases to their workers.

But the problem with that is their workers are consumers and if consumers don't feel good about their salary and or don't see any extra or disposable income, then they are not going to spend in the economy.

So the Bank of Japan sees these multiple challenges but has not been able to solve the puzzle related to getting inflation to the 2 percent level as of yet.

Have a nice day and be safe!

Bloomberg: Japanese Govt. Want Companies To Move Back to Japan From China: Comments Later

https://www.yahoo.com/news/japan-fund-firms-shift-production-090152175.html

Article:

(Bloomberg) -- Japan has earmarked $2.2 billion of its record economic stimulus package to help its manufacturers shift production out of China as the coronavirus disrupts supply chains between the major trading partners.

The extra budget, compiled to try to offset the devastating effects of the pandemic, includes 220 billion yen ($2 billion) for companies shifting production back to Japan and 23.5 billion yen for those seeking to move production to other countries, according to details of the plan posted online.

The move coincides with what should have been a celebration of friendlier ties between the two countries. Chinese President Xi Jinping was supposed to be on a state visit to Japan early this month. But what would have been the first visit of its sort in a decade was postponed a month ago amid the spread of the virus and no new date has been set.

China is Japan’s biggest trading partner under normal circumstances, but imports from China slumped by almost half in February as the disease shuttered factories, in turn starving Japanese manufacturers of necessary components.

That has renewed talk of Japanese firms reducing their reliance on China as a manufacturing base. The government’s panel on future investment last month discussed the need for manufacturing of high-added value products to be shifted back to Japan, and for production of other goods to be diversified across Southeast Asia.

“There will be something of a shift,” said Shinichi Seki, an economist at the Japan Research Institute, adding that some Japanese companies manufacturing goods in China for export were already considering moving out. “Having this in the budget will definitely provide an impetus.” Companies, such as car makers, that are manufacturing for the Chinese domestic market, will likely stay put, he said.

Testing Times

Japan exports a far larger share of parts and partially finished goods to China than other major industrial nations, according to data compiled for the panel. A February survey by Tokyo Shoko Research Ltd. found 37% of the more than 2,600 companies that responded were diversifying procurement to places other than China amid the coronavirus crisis.

It remains to be seen how the policy will affect Prime Minister Shinzo Abe’s years-long effort to restore relations with China.

“We are doing our best to resume economic development,” Foreign Ministry spokesman Zhao Lijian told a briefing Wednesday in Beijing, when asked about the move. “In this process, we hope other countries will act like China and take proper measures to ensure the world economy will be impacted as little as possible and to ensure that supply chains are impacted as little as possible.”

The initial stages of the Covid-19 outbreak in China appeared to warm the often chilly ties between the two countries. Japan provided aid in the form of masks and protective gear -- and in one case a shipment was accompanied by a fragment of ancient Chinese poetry. In return, it received praise from Beijing.

In another step welcomed in Japan, China declared Avigan, an anti-viral produced by Japan’s Fujifilm Holdings Corp. to be an effective treatment for the coronavirus, even though it has yet to be approved for that use by the Japanese.

Yet many in Japan are inclined to blame China for mishandling the early stages of the outbreak and Abe for not blocking visitors from China sooner.

Meanwhile, other issues that have deeply divided the neighbors -- including a territorial dispute over East China Sea islands that brought them close to a military clash in 2012-13 -- are no nearer resolution.

Chinese government ships have continued their patrols around the Japanese-administered islands throughout the crisis, with Japan saying four Chinese ships on Wednesday entered what it sees as its territorial waters.

Manichi: Essential Services and Supplies

https://mainichi.jp/english/articles/20200408/p2g/00m/0na/008000c

I think this article is very interesting. Train services, for now, will remain in full operations. Along with some small businesses listed in the article, which claim they are essential for daily life.

Suppliers of tissue type products have also said they will keep production moving forward, and they said as long as there is not a major run on products all should be OK.

Of course the major metro areas are now in some form of lock-down. Although its not legal like in the UK, Italy etc. lets hope citizens can maintain some kind of restraint and let this virus situation pass normally.

At the same time, economic activity and regular human activity essential for any economic or society is important. But lets hope for the short period of time, a pause can occur so we can all get back to what an economy and society should be, being vibrant economies and vibrant societies.

All countries are in this together. All countries need, for the good of everyone, to come together and ride this out correctly.

Businesses, society, and people everywhere are affected. There is no country that is spared.

In Japan the cherry blossoms will be back next year. The same in Korea. Sports and other activities will be back eventually.

But there is no need for hording of essential products as the global food chain is well able to handle, in most every country the normal demand for food and essentials. But the idea of hording puts too much of a strain on supplies or the ability to keep stores stocked. Its not a problem of supply or the ability to meet demand. The only problem is people's fear which causes the hording, which temporarily causes a shortage.

The Japanese emergency situation, with no hording, should allow for pause and allow for the virus situation to pass.

Have a nice day and be safe out there.

BBC: Japan Seniors Still Out There!

https://www.bbc.com/future/article/20200327-what-the-japanese-can-teach-about-super-ageing-gracefully

A Little Behind In Comments And Analysis

Even though there are a lot posts not all of them have some kind of analysis or comments yet. There might be about 20 or so that need to be worked on yet. I leave a few without any analysis, and they will stay that way.

Again the idea of the blog is not meant to be just academic, but to just write with a plain straight forward style or a what I call a formal polite style without the use of too many academic terms.

The blog is meant to be a combination of academic and practical ideas related to business, economy and society in Japan.

A such, the blog again is just observations, which might not be even the correct observations. But at the same time, the blog is always being reviewed and revised as needed for mistakes, errors, and content that needs to be changed.

I have intentionally decided not to allow comments, due to the fact there is just the potential for too many negatives in the Internet world, as such just my ideas and observations.

Everyone have a nice day/night and stay safe!