Japan Economy:

 https://mainichi.jp/english/articles/20211007/p2g/00m/0bu/056000c

Article:

TOKYO (Kyodo) -- A key index reflecting the state of the Japanese economy marked its sharpest fall in 15 months in August, due to sluggish car output hit by a global semiconductor shortage, government data showed Thursday.

The Cabinet Office's coincident index of business conditions for the reporting month fell 2.9 points from July to 91.5 against the 2015 base of 100. It is the biggest decline since the 7.1 point drop logged in May last year, when Japan was under its first COVID-19 state of emergency.

Ideas:

August was not a good month for the Japanese car industry or even the global car market as many car makers in Japan and globally reduced their output due to the chip and other parts supply shortages.

While business conditions might see an increased or improved sentiment in some sectors or industries as the emergency measures are lessening, it appears the business conditions in the manufacturing industry is getting worse.

The manufacturing industry along with exports have been the positive areas for Japan in the past year but now the manufacturing industry is going through is own challenges which is not going to help the Japanese economy grow out of the pandemic.

Article:

Although the index fell for the second consecutive month, following a 0.2 point decrease in July, the office maintained its assessment that the domestic economy is "improving," employing the most optimistic expression in its five-level evaluation for the sixth month in a row.

A government official told reporters that the indices representing levels of industrial output and shipments dropped with the auto industry bearing the brunt of the chip crunch. A shortage of car parts due to factory shutdowns in Southeast Asian nations caused by surges in coronavirus infections also had an effect.

Ideas:

A 0.2 point drop is really not that much and even a 2.9 point drop is still not that bad. Business sentiment is always up and down, but the reality is you never know what businesses are going to do. A survey while good to try and predict or guess what is going on you never really know until you see what's business are really doing.

Its very possible that some manufacturing companies are not experiencing any of the challenges that car companies are facing. 

They might be challenges related to logistics and shipping but not the supply or parts shortages the car companies are experiencing now.

The virus situation in many Southeast Asian nations might continue to effect Japanese companies for a while until the all clear sign is given and things can get back to some kind of new normal.

Article:

The index for retail sales also fell, with the official saying those of convenience stores were poor as people refrained from going out amid a resurgence of the virus.

The leading index of business conditions, which forecasts the situation in the coming months, for August also posted a second successive monthly decline, down 2.3 points to 101.8.

Ideas:

As the virus situation peaked and exploded in August is understandable if consumers decided to stay away from shopping in stores except what they really needed.

Business conditions for August were definitely not very good. But there have now been reports about how Japan has been able to suddenly overcome the August peak of virus cases to minimal cases in October.

So while some of the Japanese economy is begging to get back to some kind of new normal, the manufacturing industry now has it down set up challenges to overcome, which of course include exports.

Now it will be interesting to see just how much of the service sector can come back to some kind or new normal. Domestic tourism may begin to see an increase but the international tourism industry might not for a long time, unfortunately.

Have a nice day and be safe!