Japan Economic News:

 https://mainichi.jp/english/articles/20201207/p2g/00m/0bu/083000c

Japan Oct. key economic index up for 5th month in row, pace quickens

Article:

TOKYO (Kyodo) -- A key index reflecting the current state of the Japanese economy rose at a faster pace in October, climbing for the fifth straight month in yet another sign that the economy is emerging from the initial hit of the coronavirus pandemic, government data showed Monday.

The Cabinet Office's preliminary data for the coincident index of business conditions in the reporting month rose 4.9 points from the previous month to 89.7 against the 2015 base of 100, marking the second-largest increase since comparable figures became available in January 1985. It was up 6.0 points in July.

The improvement was helped by strong year-on-year growth of sales and shipments of cars and home appliances, partially reflecting a consumption tax hike in Oct. 1 last year, a government official told reporters. The reading climbed 1.4 points in August and 2.4 points in September.

Ideas and Analysis:

Any economic news that appears positive is always good. But at the same time we always need to be aware of the big picture and not just what one index might illustrate. Its very good that cars and home appliances are showing signs of growth but its only a small part of the 3rd largest economy in the world.

A coincident index is a measurement that looks at several important variables in an economy that usually move together either positively or negatively, or no changes.

Its easy to see why there was a 6.0 point in increase in July when the economy was almost at a standstill  in the spring. So any change of increased economic or business activity would have helped to push the index in the positive range.

Last year in October, when the sales tax increased from 8 percent to 10 percent, consumer spending was of course down as consumer were still trying to figure out just how much the extra 2 percent would affect their lives.

And for Japanese businesses, even though the Japanese government had put into affect different rates of the sales tax for different services and products, such on cars and no increase in the sales tax, they have to find way to be innovative and creative to offset weary consumers who were adjusting to the increase in the sales tax.

Article:

Although the index remained below the reading of 94.5 logged in February, it topped 89.3 in March when the economy had yet to see the impact of the government's state of emergency declaration over the pandemic in April.

The index has continued to improve since it dropped to 71.7 in May. The state of emergency declaration was fully lifted late that month.

The May figure was the worst since 71.1 logged in April 2009 in the aftermath of the global financial crisis.

The office maintained its assessment that the economy is "bottoming out" after an upward revision in August from the view that the economy was "worsening," the most pessimistic of its five assessment levels.

The leading index of business conditions, forecasting the situation in the coming months, also rose 0.5 point to 93.8 in the reporting month, up for the fifth consecutive month.

Ideas and Analysis:

The idea that the Japanese economy is "bottoming out" is a positive way to say that things maybe are not so good but we have reached the bottom and now the economy will be headed back in the right direction.

Governments like to use phrases that try to show something positive or signal something positive and not be dark and pessimistic about the true state of things. 

But the to be fair and honest after the May figure hit 71.1 its only natural for any government or organization to see improvements as more economic and business activity began to improve in the summer months and into the fall despite the fall beginning to large increases in the virus infections.

It has now been somewhat concluded, while the "Go To" campaign was a idea to try and get the economy somewhat moving again, it might have actually made things worse.

Even thought the Japanese government, including Tokyo, are implementing measures to reduce some economic activity with suggestions for some places to close early, the Japanese economy is in a catch 22 situation, as is many economies and businesses globally.

How much economic and business activity can be closed down or reduced without affecting the lives of workers in those businesses?

And will be the new measures actually reduce increase in the virus remains to be seen.