Japan Industrial Output:

 https://mainichi.jp/english/articles/20210730/p2g/00m/0bu/032000c

Article:

TOKYO (Kyodo) -- Japan's industrial output rose 6.2 percent in June from the previous month, surpassing the level before the coronavirus pandemic, buoyed by a recovery in production of autos and semiconductor-making equipment, government data showed Friday.

The seasonally adjusted index of production at factories and mines stood at 99.3 against the 2015 base of 100, above the 99.1 posted in January 2020 and topping the figure for the second time since April this year, the Ministry of Economy, Trade and Industry said in a preliminary report.

Ideas:

The manufacturing industry seems to have recovered compared to the services sector. 

The manufacturing industry most likely is able to control its internal environment a little better than the services sector in that most likely it can limit the number contacts it workers has while in the working environment.

And of course global demand increasing again is very good, along with the idea that maybe in 2020, the buying of new cars was delayed and this year consumers are making up for waiting one year to buy a new car.

Article:

The result followed a downwardly revised 6.5 percent drop in May.

In the reported month, production in the auto industry including vehicles, steering devices and engines surged 22.6 percent from a month earlier, making it the biggest contributor to the index's rise.

"Although the global chip shortage continues to weigh, automakers and related manufacturers increased their production to address a sharp rise in demand," after the sector's May factory activity dropped 19.4 percent, a ministry official said.

Ideas:

There was also May Golden Week, which sometimes can stretch out for an entire week, which means productions facilities might be closed for all or some of that time. As a result a full week of a loss of production which might skew the production numbers.

Again the rise in consumer demand for cars, in Japan and globally, could be nothing more than delayed buying from an year earlier when the pandemic hit, and consumers decided to wait to buy as new car. 

Maybe there were worried about their jobs, a loss or drop in salary and or  didn't want to go out where other people were.

At the same time, last spring, spring 2020, the shipping and logistics sectors were not doing so good. So the shipping of cars maybe even in Japan, and or course globally, might have caused a temporary shortage in some global markets.

Article:

An 8.9 percent increase in production machinery on the back of growing in demand for chip-making equipment also helped push up the output index as a whole.

The ministry maintained the assessment, saying industrial output is "picking up."

Meanwhile, production of transportation equipment excluding motor vehicles declined 7.2 percent in the month.

The index of industrial shipments increased 4.3 percent to 96.3 while that of inventories was up 2.3 percent at 95.9.

Ideas:

As this article shows, the industrial sector is made up of many different areas or parts. And as such, they don't all increase or decrease at the exact same time.

Just like in an economy, which is made up of many different sectors, that don't all increase or decrease at the exact same time or same rate.

Again industrial output might be "picking up" but that doesn't mean every area of industrial output is picking up at the same rate. And economy is complex with many different areas and sectors and they never increase or decrease at the same rate.

Its interesting that there is now demand for chip-making equipment. That suggests that maybe some Japanese companies are innovating and or trying to get into the chip making business because maybe Japanese companies need to diversify their supplies bases and not rely on just one or a few suppliers in the future.

Article:

Based on a poll of manufacturers, the ministry expects output to fall 1.1 percent in July and rise 1.7 percent in August.

"Although there are ups and downs, it is expected that the uptrend will continue." the official said.

But he also pointed to downside risks deriving from the impact of the spread of highly contagious new variants of the coronavirus in Japan and abroad as well as the prolonged shortage of semiconductors on auto production.

Ideas:

And yes in any economy, even without the pandemic there are ups and downs and the manufacturing industry is highly dependent on the demand of consumers/customers, whether that is business to business or business to business to the end customer.

But now the virus situation of course has added some new variables into the mix.

As was seen last spring, it wasn't just a decrease in demand that caused challenges but also challenges in logistics/shipping including container ship challenges and even air freight challenges. 

And in some places challenges in the manufacturing plants too with the covid situation affecting manufacturing workers.

And then you have in supply challenges related to the potential shortage of semiconductor chips or anything else that is in short supply that manufacturers need.

Have a nice day and be safe!

Japan June Jobless Rate:

 https://mainichi.jp/english/articles/20210730/p2g/00m/0bu/026000c

Article:

TOKYO (Kyodo) -- Japan's unemployment rate fell to 2.9 percent in June, reflecting a pickup in hiring at restaurants and retailers hit hard by the coronavirus pandemic as the state of emergency was lifted in some areas, government data showed Friday.

The seasonally adjusted jobless rate dropped from 3.0 percent for May, improving for the first time since March, the Ministry of Internal Affairs and Communications said.

The job availability ratio improved to 1.13 from 1.09 a month earlier, the Ministry of Health, Labor and Welfare said. The latest figure of 1.13 means that there were 113 openings for every 100 job seekers.

Ideas:

Most likely the Japanese unemployment rate is going to be very volatile for a while as the pandemic situation continues on.

Yes people will eventually be heading back to their favorite restaurants and stores but probably not in numbers seen before the pandemic.

So mostly likely the Japanese unemployment rate will remain higher that what it was before the pandemic.

Even now at 2.9 percent, it is still one of the lowest in the OECD. And the job availability rate is still very good compared to many countries.

Article:

Japan lifted its third state of emergency, which asks alcohol-serving establishments to suspend their operations, other eateries to close early and people to refrain from unnecessary outings, in nine prefectures including Tokyo in late June, and only the southern island prefecture of Okinawa remained under the measure.

But the capital was put under a state of emergency again in mid-July amid a resurgence of infections and four other prefectures are now expected to be added to the measure, clouding the outlook for the employment environment.

Looking at figures unadjusted for seasonal factors in the reporting month, the total number of unemployed people increased 110,000 from a year earlier to 2.06 million, but people in work also rose 220,000 to 66.92 million, the ministry said.

Ideas:

The pandemic appears to be going nowhere but up. As the new variants are causing problems in Japan and globally. 

As such the new emergency measures most likely will be kept or should be kept until the end of August.

Of course that is in the middle of the Obon season, the vacation season, and as such travel and domestic tourism most likely will be affected.

So how can both the number of unemployed and the number of employed both increase at the same time? Part of the reason is the number of people who report they are out of work and or seeking unemployment benefits.

If a person who is out of work and doesn't seek benefits or try to find work, in some countries they are not counted as unemployed, as they aren't in the system seeking work. Only when they seek unemployment benefits and show they are looking for work than they are considered unemployed.

So most likely there was some kind of combination of layoffs and or people applying for benefits and people actually gaining employment at the same time.

Take out the pandemic scenario, and this is normal economic activity as there are always going to be be being laid off, people seeking benefits and people being hired all at the same time.

Article:

By sector, accommodation and restaurant services, hit hard by the pandemic, logged the first year-on-year gain in the number of workers in 18 months, up 130,000 from the previous year to 3.82 million.

The wholesale and retail fields saw an increase of 490,000 from a year ago to 10.71 million, adding the largest number of jobs among others.

Among the jobless people, 770,000 people voluntarily left their jobs, up 50,000, while 530,000 were new job seekers, up 30,000.

Ideas:

Despite the number of gains in the numbers of workers, most likely the services sector has a long way to go before it reaches the pre-pandemic level. 

Especially any services sector jobs that might have been related to international tourism. Yes domestic tourism and economic activity is going to come back, maybe slowly of course, but not the million plus international tourists that were coming to Japan before the pandemic.

So any jobs that might have been related to international tourism just aren't going to come back anytime soon.

And as a example of the 770,000 workers who voluntarily left their jobs, how many of them went immediately and filed for unemployment benefits. If they didn't they might not be included in the number of unemployed. For example if 530,000 were part of the 770,000 that might mean 240,000 might not be considered in the unemployment numbers as now the 530,000 are because they are looking for work.

Article:

The number of people laid off declined 10,000 to 600,000, down for the first time in 17 months, which a ministry official said could be regarded as a "turning point in trends," along with the increase of employees at hotels and eateries.

Compared with a pre-pandemic figure, however, the official told reporters that the number of people on payrolls was still at a low level, saying that it was 550,000 lower than the 67.47 million in June 2019.

Ideas:

What is the exact difference between being laid off and voluntarily leaving their jobs? What if those who left their jobs voluntarily were given some kind of incentives to leave their jobs such as some kind of severance pay, some kind of bonus instead of just being laid off?

But still even 600,000 is a lot of layoffs and the pandemic is still causing major challenges for the Japanese economy.

It might be the lowest in 17 months but it still too high. There might be an increase in employees at hotels and eateries but most likely it is nowhere what it was before the pandemic.

The 550,000 to be fair and honest might be a little low, because most likely there are many who are not included in the unemployment numbers for whatever reason. A fair estimate might be double that amount.

For example just the numbers listed, 600,000 layoffs and only 550,000 lower doesn't exactly add up.

Article:

Takuya Hoshino, a senior economist at the Dai-ichi Life Research Institute, said the number of workers has been falling on a seasonally adjusted basis since the beginning of this year as the government repeatedly issued virus emergencies, but the downward trend is "coming to a halt."

Hoshino pointed out that more dining establishments are increasingly defying the government's requests amid repeated virus emergencies and that the increase in the number of people employed by hotels and eateries may be an indication of this.

"The situation over the spread of virus infections is getting worse for sure, and the employment environment in the accommodation and food service industries could worsen again," he said.

Ideas:

Most likely what is really happening is that now hotels and eateries are responding to the demand by customers and now they are beginning to return.

Consumers are in a period of pandemic fatigue and as such they want to be out and about and the pandemic has been going on for so long they have somewhat gotten used to it.

And of course as more and more Japanese citizens become vaccinated they feel more and more comfortable being out and about.

As such they are heading back to their favorite restaurants, hotels, or hotel buffets, their favorite stores and other places.

So hotel and other places are just responding now the increase in demand for the services they offer.

Unfortunately the virus situation at the same time has increased again.

And yes, it could change again because of the increase in virus cases.

Have a nice day and be safe!

IMF Japan Estimate:

 https://mainichi.jp/english/articles/20210728/p2g/00m/0bu/002000c

Article:

WASHINGTON (Kyodo) -- The International Monetary Fund on Tuesday forecast that Japan's economy will grow 2.8 percent in 2021 from a year before, down 0.5 percentage point from its April estimate as the country continues to struggle to contain the spread of the novel coronavirus.

But the global growth projection remained unchanged at 6.0 percent, as dimmed prospects for Japan and emerging economies such as China and India were offset by improved outlooks for the United States and some other major advanced economies.

In an update of the World Economic Outlook report, the Washington-based institution highlighted the continuing divergence of economic recoveries from the pandemic due to differences in the pace of coronavirus vaccine rollout and policy support.

Ideas:

Most likely Japan is not even going to reach 2.6 percent economic growth for 2021. The virus situation seems to be out of control and there doesn't seem to be any "light at the end of the tunnel" meaning there doesn't seem to be an end in sight.

Tokyo at the moment appears to be in a serious crisis situation, with hospital unable or unwilling to take extra serious cases.

As one person who lives in Tokyo said he heard multiple ambulance sirens which he had never heard before in such a short time.

Consumer spending is estimated to be 50 percent of Japan's GPD, and if the virus situation continues on, its highly unlikely that consumer spending in Japan can reach its potential.

Yes, exports are doing reasonably well, but exports alone can't and won't lift the Japanese economy.

The US economy might appear to be doing better, but even in the US the virus situation in some areas is now out of control again.

And there are reports that maybe the logistic and supply chains are going to be challenged again because of the increase in the variants.

Article:

"Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs," the IMF said, drawing a distinction between countries that can expect further normalization of activity later this year -- almost all advanced economies -- and those that will face resurgent infections and rising deaths from the pandemic.

"The recovery, however, is not assured even in countries where infections are currently very low so long as the virus circulates elsewhere," it added, warning of the highly contagious Delta variant that is pushing up the number of cases in many parts of the world.

Japan was the only country among the Group of Seven industrialized nations that faced a downgrade in the IMF's latest economic outlook. The country's vaccine rollout initially lagged behind other developed countries, and it has imposed anti-virus business restrictions amid a rise in infection cases.

Ideas:

Japan was slow in the beginning to start the vaccine process but now seems to moving ahead with the vaccinations.

But the problem has always been the chance to get tested in Japan. As reports have said it costs up to 30,000 yen or $300 at a hospital or clinic, while in other countries the virus tests are free. 

So even if a Japanese person wanted to get tested they might not be able to afford it or even if they could afford it they don't want to pay that much.

Even in countries with high vaccination rates, the virus variants seem to be spreading which makes the global economy still vulnerable to challenges maybe to consumer spending, possible supply chains and of course global travel.

Even with the anti-virus business restrictions the virus variants continue to spread with Tokyo having the most cases.

And even with the government suggestion that restaurants and other places closing early, it has been reported that up to 40 percent of the restaurants in the Tokyo area don't close as suggested as they they can't survive if they close in the evenings, which is where they make most of their sales.

Also the government has asked businesses to mainly do teleworking, but it appears that maybe some businesses are unable or unwilling have its employees work from home.

Its seems some businesses still are not prepared for telework after almost 18 months of the virus situation or they don't have the resources for telework.

Article:

But the world's third-largest economy is anticipated to see a stronger rebound in the second half of 2021, supported by further inoculation efforts. The IMF raised its growth outlook for 2022 by 0.5 point to 3.0 percent.

IMF chief economist Gita Gopinath said no major economic impact is expected from holding the Tokyo Olympics without any spectators from the general public allowed at venues in and around the Japanese capital due to the pandemic, given that most of the infrastructure spending -- a key factor to lift the economy -- for the games was done in the past.

But she noted at a press conference that Japan is facing "further downside risk" coming from the most recent COVID-19 state of emergency declared for the Japanese capital from July 12, which was not reflected in the latest report.

Ideas:

Yes, there is always the possibility that there could be rebound the second half of 2021. But at this time, it seems highly unlikely as again, the virus situation is out of control in Tokyo with no end in sight.

Exports most likely will continue to grow, but even exports are going to be challenged if there is a continued semi-conductor chip shortage related to car manufacturers in Japan. 

Even now some car manufacturers have either began to reduce production and or even close temporarily some manufacturing plants.

But has as been mentioned by some sources in Japan, some in Japan now seem to appear to have stopped worrying about the pandemic situation as they are out and about and some even traveling to domestic tourist destinations.

Some would call this pandemic fatigue or they have just gotten tired of not being able do to anything and they just want to be out and about.

But the problem of course is Tokyo now is in a full blown crisis related to the pandemic situation.

Article:

The United States, on the back of its mass vaccination campaign, is projected to continue to power the global economic recovery, with its growth forecast for 2021 revised upward by 0.6 point to 7.0 percent and that for 2022 by 1.4 points to 4.9 percent.

The brighter U.S. outlook, supported by anticipated legislation for additional fiscal support later this year, has largely helped lift the global growth prospects for 2022 by 0.5 point from the April estimate to 4.9 percent, according to the IMF.

China, the world's second-largest economy, is expected to see a 0.3 point lower growth at 8.1 percent for 2021, due to a scaling back of public investment and fiscal support, but a 0.1 point higher growth at 5.7 percent the following year.

Ideas:

Yes, both the US and China are still the major economic motors of the global economy and will continue to be that way for a long time.

But it must be remembered that an economy is very complex. While the news might appear to be good, there is also/always news that all parts of an economy don't grow in a linear fashion or even an an equal rate. 

So while some parts of the US and Chinese economy might be doing very good, there are probably equal parts of the economy in both countries that are not doing so good or will not do so good in the remainder of 2021.

It remains to be seen jus how much the new variants, which seem to be popping up every month, how much are they going to affect the growth of the global economy.

Supply chains, globally, are still very vulnerable to many different factors related to the pandemic situation.

And of course, for many parts of the world, global travel as not returned and most likely will not return to normal anytime soon.

Article:

India was cited by the IMF as among the countries whose recovery has met with severe setbacks in the face of renewed waves of virus infections. The country's growth forecast for 2021 was slashed by 3.0 points to 9.5 percent.

World trade volumes are projected to expand 9.7 percent in 2021 from the previous year, up 1.3 points from the April estimate.

The IMF acknowledged that better world cooperation to beef up widespread vaccine access may improve the global economic outlook, but noted that downside risks "dominate in the near term."

Ideas:

Yes there are still many downsides related to global economic growth and the pandemic.

World trade volumes may expand and may be expanding but world trade is still in a challenging situation.

As long as the pandemic rages out of control with new variants seemingly every month the global economy and global trade will remain challenges.

Who would have thought after the spring of 2020 and the seemingly calmer summer of 2020 that there would be a 2nd, a 3rd, a 4th and even a 5th wave related to the virus situation. 

As such no country is safe and as such the global economy remains at risk despite the improvement of the US and Chinese economies.

Article:

Among the risks are slower distribution of vaccines and recent upward pressures on prices becoming more persistent and leading to an abrupt tightening of monetary policy in the United States and elsewhere, it said.

Higher interest rates in the United States are feared to lead to significant capital outflows from emerging and developing economies, delivering a blow to such countries already hit by the global health crisis.

In most advanced economies, inflation is expected to subside to pre-pandemic ranges in 2022 and major central banks are anticipated to leave policy rates unchanged throughout the end of that year, the IMF said in its report.

Ideas:

The distribution of vaccines is going to a challenging situation now and in the near future.

Despite the increase in inflation in the US or the threat of increased in inflation in the US, now might not be the best time to tighten monetary policy, which means key interest rates will increase as an incentive not to borrow money from banks, which in affect reduces the supply of money in the economy which in affect reduces the amount of money being used in the economy, which reduces demand in the economy, which might help slow down the increase in inflation.

The only problem with that at the moment, is there are many businesses and families in the US that aren't doing so good and if interest rates go up they might not be able to afford what they need from a bank to survive or keep going.

But at the same time, as there are are always positives and negatives to any economic situation, if inflation does get too high it could become too much for those who are on fixed incomes and the cost of everyday things such as milk, eggs, bread, some vegetables and meat might get too high for them.

So the US Federal Reserve, as they always do, has to balance both the positives and the negatives as to whether its a good ideas to raise rates.

And anther area the the Reserve has to be aware of, and they are, that anytime they take an action, increase or decrease rates it has an affect on global stock markets and other economies around the world, all economies are highly interconnected these days.

Have a nice day and be safe!

A Brainstorming of Ideas Related to the Olympics? Part 1

 This blog post will be a continuous brainstorming of ideas related to the Olympics, the Tokyo Olympics.

As I sit and begin to watch on Japanese NHK TV the pre Olympic show, they showed the Japanese swimmer who had the bout with leukemia but is scheduled to be in the swimming relays,

One can only have a sincere sense of thankfulness and happiness for her that she is able to be there.

And you saw the scenes of her crying after some of her swimming performances one can feel happiness for her.

The Tokyo Olympics has been a long time coming so in the same way, we can feel happiness that  it is finally going to happen.

With all that has happened over the past 18 months or so, everyone should feel a sense of relief for the athletes the Olympians that they finally get their chance to do their best to give their best.

Of course, with understanding, there are those in every country who feel there shouldn't even be an Olympics.  

With the pandemic again spiraling out of control in many countries, some might wonder where are the correct priorities in this situation.

But just maybe because of all that has happened over the past 18 months, despite it maybe not changing the pandemic situation, its the right thing to do after all.

Of course some would say maybe the Olympics at this time is not the best time.

I've always had a sense for the Olympic Ideal. Not the winning of gold, but to do one best at the Olympics.

Disclaimer: My ideas of the Olympics is not about winning gold medals, or maybe even medals at all, but the idea of the human spirit exceeding expectations of one's ability and being able to achieve what a person never thought possible.

Of course these days, much of the Olympics has been narrowed to big corporate sponsors, nationality, team standings and team medals, and the individual athlete has almost been forgotten.

To be continued.......

Japanese Govt. View of Economy:

 https://mainichi.jp/english/articles/20210719/p2g/00m/0bu/047000c

Article:

TOKYO (Kyodo) -- The Japanese government on Monday maintained its view that the country's economy has seen increased weakness in some sectors in its latest monthly economic assessment, as measures to curb the spread of the coronavirus continued to weigh on consumption in July.

The economy is showing "further" weakness in some components and remains in a severe situation due to the pandemic, the Cabinet Office said, employing the same wording for the third straight month after downgrading the evaluation in May.

Ideas:

Consumer spending in the Japanese economy is not what should be, and  of course the pandemic continues to constrain the amount of consumer spending that is needed in the 3rd largest economy in the world.

That doesn't mean there is not any consumer spending, it just means its not at the level it should be.

And even in normal times, without the pandemic, consumer spending in the Japanese economy was didn't seem to reach its potential.

That means the Bank of Japan's goal of reaching 2 percent growth or an increase in inflation is a long way from becoming a reality.

Exports might be growing, but exports are only part of the economy. Most likely services now are a larger part of the Japanese economy. As some estimate the exports are no more than 20 percent of Japan's GPD.

While consumer spending might be as much as 50 percent of Japan's GPD.

Article:

The government's latest view on the overall economic situation came after Tokyo entered a fourth state of emergency over the pandemic July 12 due to a surge in COVID-19 cases following the end of the third emergency late last month.

The office retained its view on private consumption, saying it "has shown further weakness recently, especially in services spending."

A government official told reporters that the office gave up on upgrading the evaluation for consumer spending after seeing it worsen this month.

Ideas:

As some sources in Japan has mentioned to me, if you look around or go to places that might potentially have a lot of people, they are everywhere out and about doing things. But how much are they spending, for example, compared to before the pandemic.

Services spending most likely has been hurt the worst in the pandemic, as services can be anything from hotel, airlines, restaurants, or anywhere business provide things for people besides consumer products.

But you can even include retail shopping in this category, at least in stores, as people come in contact with people, while consumers might be everywhere, are they spending like they did before the pandemic.

For example, as sources have indicated, Landmark Tower in Yokohama might have a lot of people on the weekends, but how much are these consumers spending compared to before. 

Article:

"Especially, spending on entertainment-related activities picked up in late June. But this month, consumption became sluggish again as a whole, so we ended up maintaining the assessment," the official said.

With a ban on restaurants and bars serving alcohol, the virus emergency will last until Aug. 22 for the capital and the southern island prefecture of Okinawa, covering the entire period of the Tokyo Olympics from Friday through Aug. 8.

The prefectures of Chiba, Saitama and Kanagawa surrounding Tokyo as well as Osaka Prefecture are under a quasi-emergency through Aug. 22 that allows serving alcohol until 7 p.m. as long as certain COVID-19 precautions are in place.

Ideas:

Consumer spending most likely will remain sluggish or not grow much, or if any at all. 

Japan, for many reasons before the pandemic, has had challenges with consumer spending being at is potential.

But after seven years of not so good results, maybe the Bank of Japan should re-consider the idea of a 2 percent inflation rate, as not really feasible in Japan.

While other countries appear to be on the verge of increased inflation, Japan, at the moment is the exact opposite.

But that might be a good thing, for some people. If prices of regular everyday products such as eggs, milk, bread, some vegetables, meat and fish begin to rise too much during the pandemic it might begin to affect too many people, especially the fixed income elderly, and or struggling families who lost their jobs.

So the Bank of Japan maybe shouldn't be overly concerned with inflation and try more, and no doubt they are, help struggling families and businesses get through the pandemic.

Article:

By component, the office upgraded its view on corporate business sentiment, saying that it shows "movements of picking up, although some severe aspects remain." The official cited the Bank of Japan's Tankan quarterly survey released earlier this month, which indicated improved confidence among major companies.

Assessments of other major components were unchanged. The report said that exports "continue to increase moderately" and that business investment and industrial production are both "picking up."

Looking ahead, the office used the same wording as the June report, saying the economy is expected to continue picking up as the government accelerates its vaccine rollout, but warned that "full attention should be given" to the impact of the pandemic on domestic and overseas economies.

Ideas:

Improved confidence among major companies is good and needed. While all economies are made up of small, medium and large sized companies or the major companies, which have the most most revenue and sales, they should not be considered the only part of the economy that is important.

As balanced economy, lets say like Germany, where all the companies are equally important no matter they size.

And yes, in the Japan, as elsewhere, the largest companies always get the most attention.

But if you look at the entire economy and the total number of companies the larger companies in reality are jus a small part of the economy. 

The bulk of any economy, and especially the Japanese economy is the small and medium sized companies that never get in the news and never will. 

But yes, its important to know and understand what the large companies think and feel as again, sometimes they provide the bulk of investment in the economy. 

The feeling of the large companies might be improving but again, what about the mood of the small and medium sized businesses and what do they think about the future of the economy.

Most likely its the small and medium sized businesses that are having the most challenges related to the pandemic situation as they probably don't have the resources needed to overcome the pandemic or keep going during the pandemic.

Have a nice day and be safe!

Japan Exports: First Half of 2021:

 https://mainichi.jp/english/articles/20210721/p2g/00m/0bu/029000c

Article:

TOKYO (Kyodo) -- Japan's exports in the first half of 2021 rose 23.2 percent from a year earlier, marking the largest year-on-year growth in 11 years, reflecting the global economic recovery from the slump caused by the coronavirus pandemic, government data showed Wednesday.

The increase was the largest on a half-year basis since the 37.9 percent jump logged in the first half of 2010 when the world economy was rebounding from the global financial crisis, according to a preliminary report by the Finance Ministry.

Exports in the January-June period expanded to 39.86 trillion yen ($363 billion), which surpassed the pre-pandemic level of 38.25 trillion yen logged in the first half of 2019, when Japan's shipments were dented by trade conflicts between Washington and Beijing.

Ideas:

Its very good that exports have rebounded in the 3rd largest economy in the world. But it must be remembered that exports is only a part of the Japanese economy and not everything that is taking place in Japan.

Of course most likely global consumer demand for Japanese cars and other products has drastically improved and or some of it might be delayed demand, meaning many consumer might have put off or just waited because of the pandemic.'

Some of the increase might also be an improvement logistics and shipping as logistics and the container shipping sector was hit hard because of the pandemic.

Article:

The outcome is partly a reflection of a 15.4 percent plummet registered in the first half of 2020, when the pandemic disturbed economic activities across the world and dampened global demand for Japan-made items such as cars.

With strong economic recovery especially in China and the United States, Japan's exports for the six months through June were boosted by a 32.8 percent jump in car shipments as well as a 38.8 percent surge in exports of auto parts.

Imports also grew 12.2 percent from the previous year to 38.87 trillion yen, the largest gain since the 15.9 percent climb in the second half of 2017, reflecting a rebound in crude oil prices and a recovery in domestic consumption.

Ideas:

Yes, we need to always be aware, despite the huge increase in imports, its only a reflection of how far down exports plunged the first half of 2020.

Cars and car parts are a big part of the mix of exports related to Japan. As are many other products.

But something to think about. While China and the US are Japan's biggest trade partners, Japan always needs to be aware that they should always strive, as much as possible for balanced mix of trade partners.

As was seen with the trade and political conflict between the US and China, trade has the potential to be very volatile, meaning can easily go up and can easily go down. 

Yes trade with the US and China is very good, but no country, as much as possible, should depend on just a few countries for the bulk of their exports.

As much as possible a country's trade should be balanced and not just depending on the US and China only as you never know what is going to happen.

The improvement in imports and be attributed to several possible ideas, consumer demand in Japan, maybe for some foreign products has improved, an improvement in logistics and shipping, both container ships and air cargo, and changes in oil supplies which affect oil prices as oil prices are very volatile, meaning they can change quite often, which can have an affect on the overall value of imports.

Article:

Both exports and imports saw their first expansions since the latter half of 2018.

As a result, the world's third-largest economy registered a goods trade surplus of 984.99 billion yen in the six-month period, the second straight half-year period of black ink.

For June alone, Japan's exports rose 48.6 percent from a year earlier to 7.22 trillion yen, and imports were up 32.7 percent to 6.84 trillion yen. The balance marked a surplus of 383.18 billion yen, following the previous month's 189.36 billion yen deficit.

"Exports and imports sharply decreased a year ago due to the coronavirus pandemic, leading to these high growth rates for both the half-yearly and monthly figures," a ministry official told reporters.

Ideas:

Yes, its important to remember, while the increases in 2021 are very good, they are based on just how bad they were in the spring of 2020. 

At the same time, it should be remembered, the pandemic is still going on and the potential for disruptions in supply chains are still possible.

And also at the same time, improved global demand should not be taken as a given or that it automatically is going to happen. As the pandemic seems to get worse during the summer, changes in global demand might still be possible, that that it could decrease.

So while Japan is doing very good at this time, it doesn't mean, because of the continued pandemic an increase in exports is a given.

And of course, as of this writing there are always challenges with shortages of semi conductor chips for cars and the possibility of manufacturers either limiting production or even shutting down production because of the shortage, which as the potential to reduce exports and or even domestic sales.

Article:

By country, exports in the first half to China grew 27.0 percent to 8.60 trillion yen, hitting the highest level on record since comparable data became available in January-June 1979, boosted by brisk shipments of items such as semiconductor producing equipment and plastics.

Imports from the world's second-largest economy rose 14.5 percent to 9.72 trillion yen, led by strong demand for cellphones and laptops, with Japan seeing a trade deficit of 1.11 trillion yen.

In trade with the United States, exports increased 23.9 percent to 7.06 trillion yen as shipments of automobiles and car parts leaped 38.3 percent and 42.8 percent, respectively. Imports were up 7.6 percent, resulting in a surplus for Japan of 2.81 trillion yen.

Ideas:

Again its very good that exports to China and the US have rebounded nicely, but again, Japan, as much as possible should try to balance its exports so that it doesn't just rely on China and the US.

Of course China and the US, as Japan's two largest export trade partners, always get the bulk of the news related to increases exports, it should always be known, again, that sometimes trade can be very volatile, meaning there could be fluctuations due to the pandemic, now, and then also with changes in global demand and trade frictions related to political situations.

No country, or most countries want to see a trade deficit. A trade deficit usually means more money leaving the country, in the current account balance, than is coming into the country.

The US, for example is the exception, as it is mostly a trade deficit country and many of the leading manufacturers, around the world, want to sell their products in the US.

So the US always has a trade deficit. But then even that sometimes can turn into a political situation, unfortunately, because politicians don't understand global trade or they don't want to understand for their political gain.

But Japan, related to the US has always had a trade surplus, as more exports go to the US than imports from the US. 

There could be many reasons for it, but we can simply say consumer demand might be the biggest part of it.

For example, while the US might be making some quality cars, Japanese consumers just don't want to buy them. And that's OK. No country can sell everything it has in every other country. Consumer demand decides it for the most part.

Article:

"Restrictions on business activities have been eased gradually as vaccine rollouts were promoted particularly in major economies, which helped boost Japan's exports" in this year's first six months, said Masato Koike, an economist at the Dai-ichi Life Research Institute.

Looking forward, Koike said solid demand for chipmaking machines amid brisk digital investment across the world is likely to underpin Japan's exports but that the pace of recovery is expected to slow as their value has already topped pre-pandemic levels.

As for Japan's goods trade balance, meanwhile, Koike predicted that the surplus is highly likely to shrink, or that the balance may turn red, in line with an expected increase in imports.

"Imports have vast room to grow, since the nation's vaccination rate, which has been lagging behind other developed countries, will rise and boost domestic consumption," he said.

All figures were compiled on a customs-cleared basis.

Ideas:

Yes, the pace or growth of exports most likely will slow and not grow as much as they did in the first half of the year.

Part of that might be related to logistics, supply chains getting back to normal along with shipping, both air and container ships back to normal.

And then consumer demand, maybe was just waiting for an improvement in the pandemic situation, so now they have increased their demand but that also doesn't mean consumer demand will continue to improve or grow at the same pace as the first six months.

As for imports, there is always potential for growth as consumer demand in Japan tries to get back to normal.

But with the resurgence of the virus situation consumer demand might still be less than expected or needed in Japan.

As seen in the news, even with the increase in vaccinations, the number of virus cases continue to rise.

So in retrospect, the Japanese economy might be a long way off from consumer demand getting to where it should be.

Of course that is not going to make the Bank of Japan happy as it still strives for the elusive 2 percent increase in inflation.

Have a nice day and be safe!