Japan Manufacturing Sentiment:

 https://mainichi.jp/english/articles/20211001/p2g/00m/0bu/033000c

Article:

TOKYO (Kyodo) -- Business confidence among major Japanese manufacturers improved in September for a fifth straight quarter as the economy emerges from the COVID-19 downturn but component shortages weighed, the Bank of Japan said Friday.

The key index measuring confidence among companies such as automobile and electronics makers rose to 18 in September from 14 three months earlier, the highest level since December 2018, and higher than the average market forecast of 13 in a recent Kyodo News survey.

The index for large nonmanufacturers, including the coronavirus pandemic-battered service sector, slightly increased to 2 from 1, for the fifth straight quarter of improvement.

Ideas:

No doubt some businesses might feeling a little better about the future of the economy, but many weaknesses still remain.

And even in the pre-pandemic market economy there have been ups and downs as an economy is very complex.

To actually expect 100 percent of all businesses to be positive is probable not going to happen as there are always going to be those who do better and those who don't so so good.

But overall, yes business conditions might be improving but its going to take a long time for the economy to get back to the pre-pandemic level.

As for the service sector, it might take more than a long time. The service sector, as it looked before the pandemic, may neve look the same or as what is was before the pandemic.

There seems to be too many businesses that have been upended and too many people who lost there jobs.

Some might call this a transformation or a paradigm shift in the service economy as the service economy might be completely transforming itself to more of a digital services sector.

Of course not all service are going online or digital but the trend is less and less, as much as possible, face to face services to save money.

Article:

The Tankan index represents the percentage of companies reporting favorable conditions minus the percentage reporting unfavorable ones.

"It came out stronger than expected," said Toru Suehiro, a senior economist at Daiwa Securities Co.

"What remains is the gap in the pace of recovery between manufacturers and nonmanufacturers. We should also note that there is a divergence within the manufacturing sector, too," Suehiro said.

Sentiment among sectors dealing with oil and coal as well as steel improved as they benefited from rising commodity prices, the BOJ data showed.

Ideas:

There are always going be differences even in the same industry or sector. It might not be realistic to expect every company to be positive if there is a lot of competition in the industry as some will be doing better and some might not be doing as good.

The main weakness in the Japanese economy is the nonmanufacturers as they are going to take longer to recover from the 18 month pandemic.

The supply chain challenges along with supplier challenges might effect each manufacturing company differently. Some might not feel the challenges very much as some might feel the challenges a lot.

And of course those companies that supply oil, coal, and steel, with prices rising are going to feel much better as now they can charge higher prices and get more profits in the process.

But even they need to be careful, as  the companies they supply have a choice they might to have to find ways to reduce there supply due to rising prices.

Article:

Manufacturers, especially automakers, have led the economic recovery from the shock of the coronavirus pandemic while nonmanufacturers have lagged due to protracted restrictions implemented to curb COVID-19 cases.

Restaurants, hotel operators and transportation services have borne the brunt, with a state of emergency that was in place until Thursday for Tokyo and other areas limiting people's activity.

Component shortages caused by factory shutdowns in Southeast Asia, a major production hub, and tight supplies of semiconductors have become a major drag on the auto sector in recent months.

Ideas:

In the summer of 2020 until the summer of 2021, yes manufacturers were leading the recovery of the Japanese economy But now with the chip shortage and the supply chain problems manufacturers now have their own set of challenges to deal with.

Restaurants and others listed above might take a long time to recover and might not reach the pre-pandemic level until well into 2022. 

And for some of them, they might not get back to the pre-pandemic level until international tourists are allowed to return, as some or many businesses became too dependent on international tourists only.

Supply side shortages are not only effecting Japan but it has become a global problem. And not only supply challenges but still logistics or supply chains challenges.

For example global shipping charges have become too much for many manufacturers or others to ship their products.

And then, for example, if you are using container ships that take your products to the US, and especially LA and Long Beach in California, there are hundreds of container ships just sitting and waiting in the Pacific Ocean off the coast of California because of worker shortages in LA and Long Beach ports along with other logistics challenges.

Article:

In fact, confidence among automakers fell to minus 7, down 10 points from the previous survey.

Major automakers like Toyota Motor Corp. have been curbing output, casting a pall over the outlook as they form the backbone of the world's third-largest economy.

Fumio Kishida, the newly-elected president of the ruling Liberal Democratic Party who is set to become the country's next prime minister, faces the challenge of charting a recovery for the COVID-19-hit economy as the BOJ is expected to maintain its accommodative monetary easing for an extended period.

Ideas:

There have been many articles in recent weeks about Toyota and its reducing it output due to the shortages in supply parts. 

If Toyota is not doing so good then all the other Japanese car makers must also be in the same situation.

And not just in Japan but even in the US, the US automakers are doing the same thing.

So even though the pandemic situation be beginning to wind down as more and more people are becoming vaccinated we are now seeing some aftereffects or continued challenges even though the pandemic is lessening.

Its probably a good idea the the BOJ maintains is easy money policy for the time being as there are many business that might not recover for a very long time. 

And one area that Kishida wants to try and fix is the income inequality in the Japanese economy. Compared to other countries Japan's Gini index number, which measures income inequality in an economy, is nowhere near that of the US or even the EU, but its a lot more than Japan have.

But one challenge or problem that has increased income inequality is the increase in temporary jobs, contract jobs, and or only part-time jobs that many Japanese companies now offer instead of full-time full benefit jobs with good salaries. 

The contract type jobs don't come close to the full-time jobs in terms of salaries or benefits, as companies, because of shareholders and their stranglehold on companies, have to reduce costs to keep shareholders happy instead of taking care of their employees, like Japanese used to do for a very long time.

It is estimated that up 30 percent of all jobs in Japan are now contract type jobs, which can put a major strain on the economy which could retrain or inhibit consumer spending.

Article:

"Mr. Kishida is becoming prime minister at a good time because we are not likely to see the kind of sharp contraction last year due to COVID-19," Suehiro said. "With the state of emergency over, the economy will likely continue its recovery though growth may have been limited in the July-September period."

The latest survey suggests big manufacturers are cautious about the outlook.

Supply-side constraints are expected to continue and rising material prices could prove negative if demand weakens, even though they may be taken as positive in the short-term due to increased profits, economists say.

Ideas:

Rising material costs are going to be a challenge for many companies. The rising costs will "crowd out" other spending the company may have been planning to do.

Many companies in Japan, even before the pandemic, were hesitant to pass on the rising material costs to those down the chain as consumer demand it not what is should or what the BOJ wants for the Japanese economy.

If consumer demand, being positive here, does increase and increase a lot because of pent up or delayed demand, the it would be easy for companies to pass on some or all of their costs to the next in the chain.

But as of now many consumers or even companies along the chain might still be hesitant to spend as they know the economy is not back where it should be and there are still over a million unemployed in Japan which can still be a major challenge for the Japanese economy.

Article:

Sentiment among manufacturers is expected to worsen to 14 from 18 while that among nonmanufacturers will likely improve, albeit slightly, to 3 from 2.

Large companies, defined as those with 1 billion yen (9 million) or more in capital, expect a 10.1 percent gain in capital spending in the current business year through March, up 0.4 percentage point from the June survey.

In fiscal 2021, companies in the survey expect the U.S. dollar to trade at 107.64 yen and the euro to average 126.50 yen, both higher than their assumed rates in June.

The BOJ surveyed 9,360 companies, of which 99.3 percent responded between Aug. 26 and Thursday.

Ideas:

Manufacturing sentiment had been increasing since the summer or fall of 2020, but now with the increased challenges related to supply problems and logistics problems no doubt that Japanese manufacturers are not feeling very optimistic at this time.

It has been suggested that when conditions are not the best is the best time for capital spending such as investments in new factories, now equipment and so on so that when conditions to improve a company is prepared to move forward with better business conditions and they might be ahead of the competition who waited for better conditions to invest and spend.

Most exporters prefer to see a weak currency exchange rate. In the case listed 107.64 is actually a weaker rate compared to the US dollar. If they rate was 97.6 that would be considered a strong rate. A rate of 100.0 would be considered neutral for both countries. 

Exporters are able to get more for their products they sell in the US. Importers prefer a stronger rate as they don't have to pay as much for products they bring into Japan.

The BOJ has, while emphasizing the currency exchange rate must float or change naturally with no intervention from central banks they are always aware, since Japan is a major exporting country, if the rate becomes too strong it could begin to have major challenges for Japanese manufacturers/exporters and now they might be actually losing profits.

Have a nice day and be safe!

Japan Jobs:

 https://mainichi.jp/english/articles/20211001/p2g/00m/0bu/027000c

Article:

TOKYO (Kyodo) -- Japan's job availability in August worsened for the first time in four months as the government's state of emergency over the coronavirus pandemic was expanded due to a resurgence in infection numbers, government data showed Friday.

The job-to-applicant ratio inched down to 1.14 from 1.15 in July, according to the Ministry of Health, Labor and Welfare. The ratio means there were 114 job openings for every 100 job seekers.

The ratio rose 0.02 from June to July before this latest decline.

Ideas:

A economy that has 114 jobs for every 100 job seekers on the surface might be appear good for job seekers.

But what kind of jobs are available for job seekers? Are they jobs with good benefits and salaries or are does the jobs list also include contract or temporary jobs.

Unfortunately, sometimes you hear how an economy added such and such number of jobs for a month or quarter, but what kind of jobs were added? Were they full-time jobs with good benefits and reasonable salaries or were they contract/temporary jobs that are becoming more common in Japan these days.

The new Prime Minister Kishida wants to try and focus on eliminating the amount of income inequality. He allegedly puts the blame on Abenomics and it grew the economy but also created a lot of income inequality in the economy.

Article:

Separate data from the Ministry of Internal Affairs and Communications showed the jobless rate in the reporting month stood at 2.8 percent, unchanged from July, when it dropped 0.1 percentage point from June for the second consecutive monthly decline.

Throughout August, the virus emergency was in place in Tokyo and the southern island prefecture of Okinawa, where the measure was imposed in mid-July and late May, respectively.

The step was repeatedly expanded and eventually covered 21 out of Japan's 47 prefectures by the end of August, amid a resurgence of infections driven by the highly contagious Delta variant.

Ideas:

The jobless rate may only be 2.8 percent, which might sound good, and at the same time, no economy will ever have 0 percent for the jobless rate, as there are always those who choose not to work, those who are  looking for a job, and those not counted as part of the jobless as they have given up and not working, maybe such as young mothers with children, those who have retired and don't plan to work again.

Even at a low rate of 2.8 percent, you really don't know how many people, who are unemployed and looking for work. And unfortunately sometimes the figures don't show the real situation in the economy.

For example, sometimes governments might try to make the stats or figures look a little better than what they really are. But there is no evidence that Japan has done this as even 2.8 percent seems questionable when many businesses and sectors are still be affected by the virus situation such as the service industry which includes hotels, retail, tourism related businesses and so on.

But at the same time, Japan is very good at protecting workers and jobs in dire situations. So even though the pandemic has now been about 16/18 months, companies have ways to keep workers working such as moving them around to other companies until the business/company they were/are in gets back to some kind of normal.

Article:

The emergency dampened consumption and dealt a heavy blow to the economy, as people were asked to refrain from making nonessential outings and restaurants and bars were requested to stop serving alcohol and close by 8 p.m.

"The impact of the pandemic on employment conditions has continued to be seen strongly, especially in the service sector," a government official told reporters.

Following a recent drop in the number of COVID-19 cases in the country, the virus emergency was completely lifted Friday throughout Japan.

Ideas:

Consumer spending has always been a concern for the Bank of Japan has it doesn't seem to reach its potential and of course especially during the pandemic.

The services sector might begin to come back somewhat but it might take some time before it reaches the pre-pandemic level.

Even though restaurants and bars might begin to see a return to normal or a new normal in the future, the same can't be said for the tourism industry which is part of the services sector.

Domestic tourism will begin to see a return to some kind of new normal but even domestic tourism might take some time to return to it pre-pandemic level.

The real challenge of course is the international tourism sector. It might take a year or more, if even that, depending on Japan immigration actions to even begin to show signs of a return, which of course has affected a lot of jobs and companies in Japan.

Article:

The rate of fully vaccinated people in Japan is approaching 60 percent of the population, catching up with other major economies after the relatively slow rollout and raising hopes for a full-fledged economic recovery.

The total number of unemployed people in August increased 10,000 from the previous month to 1.91 million, up for the first time in three months. Meanwhile, people in work dropped 320,000 to 66.76 million, the first decline in three months.

The seasonally unadjusted figures showed that workers in the accommodation and restaurant service sectors, among the most impacted by the virus-related restrictions, decreased 6.4 percent from a year earlier to 3.66 million, seeing a sharper drop than any other industry.

Ideas:

As more and more people become fully vaccinated it will mean eventually more and more people/customers/consumes will be out and about as they begin to feel good being moving around outside and going to their favorite places like before the pandemic.

So as we see 1.91 people are reportedly jobless, which is a lot. But again how many of these people are looking for work, or maybe just waiting to return to their previous job before the pandemic or have given up looking for work?

And then 320,000 dropped from the previous three months shows maybe the pandemic continues to cause a lot of problems in the Japanese economy.

And as the pandemic continues on more and more job losses in the service sectors as maybe many businesses, who have attempted to hang on and survive finally decided that can't do it any more and are closing their doors or are laying off some workers and only keeping the minimum needed to survive and keep going.

Article:

Medical and welfare worker numbers grew 3.5 percent to 8.91 million, with the official saying demand may have surged as the government promoted its COVID-19 vaccination campaign across Japan.

Naoko Ogata, a senior economist at the Japan Research Institute, said the outcome showed "a steady move generally" toward recovery in the labor market despite the worsened virus situation and the emergency expansion, citing a decline in the number of unemployed people from a year ago.

Ideas:

Its only natural or logical that the medical and welfare areas would seen an increase of jobs while other areas such as services are seeing a continued drop in jobs.

There might be a decline in the number of unemployed which is good, but as the numbers above show there are still 1.91 people without jobs. But a real question might be, how many of the 1.91 are related to the pandemic and how many are just a normal part of regular economic activities meaning in a market economy there are always going to be jobs added and jobs lost in the economy.

Again while manufacturing and similar sectors might be improving, how long is it going to take for all areas in the services sector to return to some kind of normal besides jobs being added to the medical and welfare areas?

Article:

Compared with a year earlier, the number of unemployed people fell 130,000 to 1.93 million for the second straight monthly decline.

"Some fields such as academic research and manufacturing seem to have already started to hire in anticipation of the resumption in economic activity amid the nation's chronic worker shortage that has been basically unchanged, even under the pandemic," Ogata said.

Looking forward, Ogata pointed out the number of people on payrolls will very likely keep rising, but the possibility will remain that virus cases could surge again. "Therefore, the figure is expected to recover at a slow pace, not instantly and rapidly," she said.

Ideas:

Yes those who are unemployed and are looking for jobs will continue to decline and more and more businesses begin to get back to some kind of normal or new normal or "living with the virus".

But at the same time, the Japanese economy might not get back to its pre-pandemic level for a long time.

Even manufacturing and exports which have been strong in recent months are not beginning to see signs of weakness because of the semiconductor ship shortage, challenges with other suppliers and resources, and now a supply chain problem globally which is affecting not only transportation, getting products quickly to its end part of the chain and even global supply chain fees or cost are beginning to affect supply chains globally.

And economy is very complex and all parts of the economy don't grow the same or linearly, or evenly.

So parts might come back quickly and some parts might take up or a year or even more to get back to some kind of normal or even some kind of new normal.

For example how long is it going to take for the international tourism industry to get back to some kind of normal or even a lessened new normal in the future?

Have a nice day and be safe! 

Japan Price Increases:

 https://mainichi.jp/english/articles/20210930/p2g/00m/0na/055000c

Article:

TOKYO (Kyodo) -- Japan will experience price hikes in some food and tobacco products as well as services from October, partly due to a spike in global raw material prices, dealing a further blow to households hit by the fallout from the coronavirus pandemic.

Starting Friday, dairy producers Meiji Co. and Megmilk Snow Brand Co. will increase prices of their margarine products, as international prices have soared due to a surge in global demand and lowered output in major producing areas due to poor weather.

For Meiji, the retail price will increase by up to 12.8 percent and the Megmilk Snow Brand will pass on an up to 12.2 percent bump.

Ideas:

The increase in raw material prices might be due to the continued global supply chain challenges such as transportation problems and imbalances in shortages of raw materials.

And at the same time, because of weak demand during the pandemic, many companies might have been reluctant to increase or "pass on" their costs to the next in the chain, whether companies or the final consumer.

Whenever there are challenges in producing or growing because of weather which might result in lower supply than expected growers and producers are going to raise the prices they charge in order to try and keep the same amount of revenue with the smaller supply.

And of course you add in a surge in demand and producers/growers will automatically increase prices and more buyers want their products.

There might be some more than usual prices increases this fall, as the pandemic finally begins to run its course and more consumers are out and about and demand begins to maybe get back to or near the pre-pandemic level for some products and even services.

Article: 

Food and beverage maker Ajinomoto AGF Inc. is increasing the price of its 40 coffee products, estimating they will soar some 20 percent.

According to Ajinomoto AGF, it expects the inflated market rate to remain so for the time being, citing the anticipated recovery in global demand for coffee with economic activities gradually resuming after the pandemic.

Under the government's repeated state of emergency declarations over the pandemic since spring last year, people have been asked to refrain from nonessential outings while businesses were asked to temporarily shut down or shorten their operating hours.

Ideas:

An increase in 20 percent might be because Ajinomoto is trying to make up for lost sales during the pandemic period when demand might not have been so good for the company.

And so it looks like the inflated rate will remain as they try to recover what they can from the long pandemic period when demand was not what they wanted or needed.

So as consumers now begin to venture out more and more there will be more trips to the supermarket, more trips to the department stores, more trips to restaurants, etc.

But at the same time it might take some time for companies to make up for lost sales and revenue, it at all, that was lost during the pandemic.

What Ajinomoto AGF needs to be aware of, and of course they are, is the ongoing supply chain transportation problems, such as if they ship their products to the US, where container ships trying to unload their containers in LA or Long Beach California have had long waiting periods outside the ports off the California coast because of labor shortages and not being able to unload the ships as quickly as needed.

Article:

Japan's economy has yet to recover to pre-pandemic levels mainly due to sluggish consumer spending, which could be affected by the price hikes.

Following a cigarette tax hike in October, Japan Tobacco Inc. will revise its pricing, with the per-pack price for Seven Stars, one of the company's signature brands, increasing from 560 yen ($5) to 600 yen.

Among other price hikes starting in November, major frozen-food maker Nichirei Foods Inc. will increase prices of consumer products by some 4 to 8 percent. Prices for commercial sales will rise around 3 to 10 percent to "maintain current product quality and stable supply."

Ideas:

Japan's economy might not get back to the pre-pandemic level until the spring of 2022, as not all consumers are going to resume all pre-pandemic activities all at once. 

Then you add in the continued challenges with services and especially the domestic tourism industry which might take some time to completely recover.

And of course even worse is the international tourism industry. Its hard to replace up to a millions international tourists a month with the domestic tourism industry.

And then add in the increase in prices that maybe companies now feel they have to no choice but to finally "pass on" their costs to consumers.

But the problem might become similar to 2014 and 2019 when the Japanese government increased the sales tax from 5 to 8 percent and then 8 to 10 percent each of the years. 

And what happened when they did? For example in the Q2 of 2014 consumer spending went way down as possibly consumers spend in Q1 what they needed before the prices increased on April 1 in 2014. 

And then in 2019 Q4 spending was down as consumers either spend early or didn't want to spend because of the higher prices.

In September of 2019, as I observed, being in Yokohama, many stores and businesses were having pre-tax increase sales as a way to get consumers to buy before the October 1 sales-tax increase.

But as always, even though prices increased, consumers always begin to get used to the higher prices and consumer spending starts to get back to some kind of normal which did happen in 2014 and 2019.

So most likely consumers in the fall of 2021 will also not like the prices increases but most likely will eventually begin to get used to the higher prices if they can afford them.

Article:

Residents will also face higher utility bills in November.

The monthly household electricity bill for an average household will be 73 to 171 yen higher than in October, while the natural gas bill for an average home is set to climb by 91 yen, at most, according to power and gas companies across the nation.

Households in Japan will also see from next year price changes in other products such as bread.

The prices of bread and udon noodles will increase around January, following an announcement by the Ministry of Agriculture, Forestry and Fisheries of a 19 percent price rise on average for six months from October for wheat imported by the government and sold on to private milling firms.

The farm ministry has cited "China's brisk buying" and "a large increase in sea freight costs" behind its decision to increase prices.

Ideas:

An increase in global energy prices are increasing globally and Japan consumers and companies will see increases in prices or costs.

Companies who use a lot of energy such as oil and see an increase in energy prices or costs most likely will pass on the costs whomever is next along the chain.

An increase of 73 to 171 yen might not seem like much but for some it could be a lot. Especially when you add in increases in daily food or households needs. So if all of those are increasing all at once, as it looks like its going to happen due the companies trying to make up for lost sales and revenues. for some consumers/people it might be too much.

Freight or shipping costs are become too much for many companies now. And the shipping companies are beginning to recognize that costs are becoming too much so they are taking the needed steps to try and control their rates they have to charge globally.

Have a nice day and be safe! 

Toyota Output:

 https://mainichi.jp/english/articles/20210929/p2g/00m/0bu/036000c

Article:

NAGOYA (Kyodo) -- Toyota Motor Corp. said Wednesday its global output dropped 16.2 percent in August from a year earlier to 531,448 units, the first fall in a year, due to parts shortages amid the spread of COVID-19 in Southeast Asia and a semiconductor crunch.

Toyota has already announced plans to curb production in September and October, clouding the outlook for an auto sector that has staged a strong recovery in sales in key markets including China and the United States.

The world's top-selling automaker has trimmed its output outlook for fiscal 2021 through next March to 9 million units, down 300,000 from its initial plan.

Ideas:

Not only Toyota but most likely all automakers globally are either doing the same thing or making plans to reduce domestic and global output.

There are two parallel forces in play here; one being the semiconductor chip shortage and at the same time there is still a real supply chain problem globally.

If you consider logistics and supplies there are some real challenges. For example, as reported in my news outlets in the US alone there are as many as 50+ container ships sitting in the Pacific Ocean waiting to be unloaded as there aren't enough workers at the LA and Long Beach ports in California. 

And most likely there might be challenges in many other ports globally.

Of course now that Toyota and most likely most automakers have reduced their output and supply what is that going to do to car prices in the future. Are they going to bite the bullet and accept lower total sales or are they going to raise prices to keep the same amount of profit to keep shareholders happy.

Article:

Global sales in August rose 3.9 percent to 748,893 units, marking the 12th straight monthly gain, Toyota said.

Southeast Asia serves as a key manufacturing hub for automakers but factory shutdowns in countries such as Malaysia and Vietnam due to the pandemic have made it difficult to secure enough parts.

It has caused an additional headache for automakers already scrambling to cope with global semiconductor shortages. Chips are used in everything from laptops and game consoles to electronic devices and cars and the pandemic has boosted demand for some of those products.

Ideas:

Japan and Toyota can no longer afford to think Japan only because businesses and economies are so interconnected that problems in other countries can effect everything on all countries. 

So even production in Japan can be heavily effected by challenges in Malaysia and Vietnam where automakers in the Japanese domestic market are effected by what is happening in other countries.

And then there is the additional challenges to the Japanese economy and not just automakers as chips are now used in almost everything that is electronic.

There might be not shortages or supply problems yet, but all of these companies that rely on chips are now in competition with everyone else to find and get the chips they need.

And of course there are always positives and negatives in any economic activity. While the pandemic is a terrible thing it has boosted demand and increased business for some areas such as chip making companies.

Article:

In August, Toyota reported a 19.9 percent fall in overseas output to 345,722 units while domestic production dropped 8.4 percent to 185,726 units.

By region, production in China tumbled 30.3 percent from a year ago while Asia as a whole except Japan reported a 21.4 percent drop. Output fell 14.6 percent in North America.

The automaker expects global output to roughly halve in September and decrease around 40 percent in October from its original plans. The impact of recent production curbs on sales is expected to become apparent in the months ahead.

Ideas:

It would be interesting to know just what surplus or supply Toyota has despite the reduction n output. Do they have for example enough supply for the rest for 2021.

But according to the article Toyota might not even have enough surplus or excess supply to make to the end of 2021 and most likely at that time global sales will begin to decrease a lot.

So are there going to be long waiting periods for some cars or are car buyers going to buy before the supply runs out.

A 50 to 40 percent decrease in production can't be good for the company's profits if they really are cutting back that much. 

And again most likely this is the situation with many of the car makers. Can they survive this much decrease in output. Or maybe they have a surplus of cash reserves or other such resources to be able to survive.

And then you add in all of the other companies that are related to the car industry and you see a huge supply chain challenge and just how are all of these related companies going to survive with  40 to 50 percent decreases in production.

Article:

In August, Toyota sold 637,324 units overseas, up 3.4 percent. While the spread of COVID-19 prompted some dealerships in China to shut, sales in North America, where RAV4 compact crossover SUVs are popular, were more or less flat.

Buoyed by strong demand for the Yaris and Roomy compacts, sales in Japan rose 6.7 percent to 111,569 units. The figure in Japan includes sales of minicars with engines of up to 660 cc.

Ideas:

So it depends on the supply and demand of some Toyota models. Maybe some models are going to be OK with the production and sales and some models are not going to be OK.

Then Toyota be trying to create a safe-guard strategy where it picks and choose which models to continue to produce depending on present and estimated demand.

Most likely all the car makers are making the same kind of strategy decision depending on what cars or most in demand and try to keep those in production and closing those not in demand and closing them to try as much as possible a complete shutdown due to the chip shortage.

And then just recently in Japan there is a new type of strategy to get consumers into new cars. Car makers are now using a subscription type program, somewhat similar to leasing but not exactly the same thing.

The new subscription program, where a customer might sign a three, five, or seven year contract which provide for insurance and maintenance is very popular among young people who don't want to own a car. The customer doesn't own the car but uses it like its his or her car.

And also at the same time car-sharing is becoming more popular in Japan as again those using the car don't own then but use it like its their own.

Subscription programs might be the future, besides electric type cars for car makers especially in the big cities in Japan. 

Have a nice day and be safe!

Japan's Core Consumer Prices:

 https://mainichi.jp/english/articles/20210924/p2g/00m/0bu/031000c

Article:

TOKYO (Kyodo) -- Japan's core consumer prices were flat in August from a year earlier with a record drop in mobile phone charges offset by sharply higher accommodation fees and surging energy prices as the economy gradually recovers from the pandemic, government data showed Friday.

The latest consumer price index, coming after 12 months of decline, does not change expectations that the Bank of Japan will maintain its monetary easing as its 2 percent inflation target is still far off.

Despite its peers in the United States and Europe preparing to gradually wind down stimulus amid the prospect of accelerating inflation, the BOJ does not see a similar urgent need even though higher energy costs have lifted Japan's core CPI.

Ideas:

While the overall core consumer prices might have been flat in August doesn't mean all prices didn't change. As a market economy is very complex there might be no change in some or many prices and there might changes in some due to demand and supplier costs.

Mobile phone charges might be falling but the mobile phone companies will find ways to make up for the losses charges with higher fees in other areas to make sure they can keep the same or similar profit margins and not lose anything.

The increase in accommodation fees seems not appropriate at this time, if it means hotels and other type places. Demand for travel and such doesn't seem to be back to normal or even near normal at this time.

And with energy prices, they are extremely volatile meaning suppliers and such are highly dependent on the global energy market, which means the customers or supplier are then dependent on what suppliers do. As such as energy suppliers have no choice but pass on the increase in energy prices that means the users of the energy, such as oil and gasoline are now going to have to pay more too.

The Bank Japan, at this time, would be wise to concentrate, as much as possible, on helping those businesses and families who are still having challenges because of the pandemic as for example there are many businesses and industries that are still struggling and for some there is no end in sight or no light at the end of the tunnel just yet.

The US and the EU might be winding down their stimulus programs but it a little too early for Japan to do the same.

There are many parts of the Japanese economy such as the services industry, not to mention the tourism businesses are are far from out of the pandemic at this time.

Article:

Tracking higher crude oil prices, energy prices gained 5.5 percent from a year earlier with those of kerosene surging 20.0 percent and gasoline jumping 16.9 percent, according to the Ministry of Internal Affairs and Communications.

Accommodation fees were another positive contributor, up 46.6 percent, the sharpest increase on record, the ministry said.

The sharp gain came in response to a plunge in fees charged by hotel operators under the government's "Go To Travel" subsidy program to spur local tourism that began in late July last year. The program was suspended nationwide in late December amid the spread of the coronavirus.

Ideas:

Japanese suppliers who are dependent on the global energy market are not going to just sit on the higher prices they have to pay bring the energy commodities to Japan and they will and have passed on the higher prices to those in the supply chain.

And again, why the sudden increase in accommodation fees when maybe travel and tourism is not yet back to pre-pandemic levels. 

And it can't be said that domestic travel alone carry the tourism market. But if you add in the decrease in fees last year because of the "Go To Travel" subsidy program then that might be enough for hotels to increase their fees at this time, as they now need or want to make up for a loss of revenue due to the suspension of the subsidy program.

Article:

A big drag was mobile phone fees, which tumbled 44.8 percent, the largest-ever drop, with the negative impact expected to continue as major carriers started offering cheaper plans this spring under government pressure.

"Absent the impact of mobile communications fees, the 'Go To' program, and energy prices, the price trend should be positive, rather than negative," a ministry official said.

The BOJ expects the core CPI to gain 0.6 percent in the current fiscal year through March.

Ideas:

While carriers might be offering cheaper plans they will find ways to make sure their profit margins are not compromised. Which means they will find other products and services that they will rise prices on to offset the cheaper plans.

The expectations of the price trend to increase might be there, to be fair and honest, where are the prices going to increase? There have been some articles recently that have talked about increases in food prices as suppliers can no longer absorb the higher prices they have to deal with and such now need to pass on the higher prices to the next in the supply chain.

A 0.6 percent increase in the core CPI might sound good and might be good, but how really is that? Is there a for example a 0.6 percent increase in demand or is it a 0.6 percent increase in supply costs that have been passed on the those next in the supply chain?

Article:

Toru Suehiro, a senior economist at Daiwa Securities Co., said further rises in the core CPI may be limited given that the pace of gains in energy prices has been slowing.

"We need to see whether prices will go up in the service sector helped by pent-up demand," Suehiro said, referring to an expected recovery in demand suppressed by the pandemic.

"There is also a possibility that firms (in the service sector) will compete to capture such demand by cutting prices," Suehiro added.

Ideas:

Energy commodity prices are very volatile meaning they change very quickly up and down. At the same time for the core CPI it might not be a good idea to track core CPI and consider the changes in energy prices. Yes, energy suppliers need and do pass on their prices to those next in the supply chain including for example food manufacturers who use the energy and as the energy suppliers have to pass on their higher prices to those next in line such as the food manufacturers then of course the food manufacturers are going to pass on their higher prices to those next in line such as supermarkets and other places and then of course the supermarkets will have no choice but to pass on their higher supply costs now to the regular customers or consumers.

Yes, as the emergency situation has been reduced it will be interesting to see how much demand in the services sector area will return, how fast it will return and how much, and yes is there really a lot of pent-up demand as mentioned.

For example a source in Yokohama who was in the Yokohama eki, station area said there were already a lot of stores that were having sales as they were trying to get some of the so-called pent-up demand that might be there.

Article:

Robust exports helped manufacturers that have played a key role in Japan's economic recovery from the pandemic fallout. But service providers have lagged amid the spread of the highly contagious Delta variant that has led COVID-19 restrictions to remain.

So-called core-core consumer prices, excluding fresh food and energy items, fell 0.5 percent, down for the fifth straight month.

Ideas:

Export growth has been very good. But it must be remembered exports alone is not going to grow the economy and get the Japanese economy back to the pre-pandemic level.

Exports themselves might be at or better now that the pre-pandemic level if you don't take into account the global chip shortage.

But the Japanese economy is not the Japanese economy of the 80's when manufacturing was a big part of the economy.

The Japanese economy has now grown into a full service economy with services and technology now contributing a bigger role or a bigger part of the Japanese economy overall.

Exports for example are only about 20 percent of Japan's GDP while consumer spending, which is linked to the services sector make up about 50 percent of Japan's GDP.

So while exports are very important they can't be expected to get Japan out of the pandemic alone.

The services sector area needs to make a full or almost full recovery before the Japanese economy can get back to some normal or a "new normal." 

Have a nice day and be safe!