Japan Govt. Economy View:

 https://mainichi.jp/english/articles/20211015/p2g/00m/0bu/030000c

Article:

TOKYO (Kyodo) -- Japan's government on Friday retained its view that the pace of economic recovery from the coronavirus pandemic-caused shock has "weakened" in its monthly assessment for October while downgrading its assessment for exports amid supply shortages.

The Japanese economy is "picking up, although the pace has weakened" due to the severe situation caused by the virus, the Cabinet Office said in its overall assessment, after revising it down the previous month for the first time in four months.

The report downgraded its view on exports for the first time in seven months, saying that they are "increasing at a slower pace" after having continued to "increase moderately" in September.

Ideas:

The Japanese economy economic recovery might be improving but its a long way from the pre-pandemic level. The main reason is the services sector or industry is not going to fully recover anytime soon.

And the reason for that is the services sector or industry is large and comprises many different parts. For example services not related to physical products such as insurance and related areas. Then there is retail type businesses, from small shops to large departments stores.

Then there the restaurants and related businesses that have big hit the hard related to the pandemic.

And then there are the tourism type businesses, which we will also include the airline industry which for example JAL and ANNA have both said they are going to reduce their work force over the next 5 years because they don't see a return to profitability anytime soon.

And before the semiconductor shortage problem the Japanese manufacturing and related industries were on there way to maybe not a full recovery but very close.

So yes, the Japanese economy is moving forward but not all sectors or businesses are moving at the same speed.

Article:

A government official told reporters the impact of supply chain disruptions due to surging COVID-19 cases in Southeast Asia has weighed on Japan's industrial output, leading to relatively sluggish exports of not only auto-related products but also other items such as electrical devices since July.

The government kept its assessment for the industrial production component saying it is "picking up, although some weakness is seen recently." Last month, the office downgraded it as the supply chain issue and a global semiconductor shortage have forced some Japanese automakers to reduce output.

The public investment component saw the first downward revision in six months, with the office saying it has been "in a weak tone recently, although it is at a high level."

Ideas:

And as ANA and JAL have their respective problems Toyota and the other seven car manufacturers now have their own respective challenges, with most of them decreasing production or output because of parts and supply problems.

And even some Japanese electronics companies and manufacturers have stated they are now having the same challenges and problems as the car companies.

Overall industrial or manufacturing might be somewhat OK, but maybe many are affected by either supplies and parts challenges and or logistics and shipping challenges that has become a global problem again.

For example, in the US and the state of California and the ports of LA and Long Beach there are at least 100+ container ships that are sitting outside of those ports in the Pacific Ocean just waiting to be unloaded.

And many of not all of those containers ship are from the Asia region, from India to Japan for example.

Public investment might be hard to understand or measure in that are they talking about welfare programs, are they talking about infrastructure programs, are they talking other programs that the government funds and develops?

Article:

The official said a sluggish move has been seen in the number of public work orders received, apparently affected by budget cuts for reconstruction projects related to the massive 2011 earthquake and tsunami in northeastern regions.

Assessments of other major components were unchanged. The office said private consumption "shows weakness further," using the same wording as the September report.

Although car sales remained sluggish, "signs of improvement have appeared" in the food services sector since more people have begun to eat out, following a sharp drop in new virus cases and subsequent lifting of the government's state of emergency across the country on Oct. 1, the official said.

Ideas:

So if they are talking about an decrease in project related to the 2011 situation then maybe its understandable that they are beginning to phase out those projects.

Private consumption, consumer spending, or household spending, whatever term you want to use, has always been an major challenge with the Japanese economy.

While there might be a surge or short uptick in the coming months as people/consumers begin to get back out and spend more, if prices continue to increase in the Japanese economy, it could put a dent in the the consumer spending comeback that is/was expected.

Talking to some sources in Japan they have said new car buyers might have wait up to six months to get that new car or subscription car because of the chip shortage.

Yes, mostly likely there are more people out and about spending but if the reports are true prices in Japan keep increasing which might be a problem for some consumers who are returning to their favorite restaurants.

Article:

With requests for people to stay home and restaurants and bars to stop serving alcohol and close early, the months-long emergency was repeatedly expanded to cover 21 out of Japan's 47 prefectures, including Tokyo, at the end of August.

Looking ahead, it said the economy is expected to continue picking up but warned "full attention should be given" to a further increase in downside risks due to "negative effects through the supply chains."

Ideas:

The downside risks are of course the chips shortages which are effecting the car companies and most electronic manufacturing companies.

Then there is now again the global logistics challenges that have returned such as the container shipping challenges including shipping charges that becoming too high for many companies, especially the small and medium sized companies in Japan.

And now you add in the increase in energy prices in Japan and globally that are already having an effect on households and businesses in Japan including higher gas prices for drivers.

And finally the overall in increase in the supply chain prices that are effecting everyone up and down the chain to where suppliers now have no choice but to "pass on" the higher supply prices to the next in line until eventually it gets to the final consumer who might or might not like the higher prices which will further hurt consumer spending in Japan.

Have a nice day and be safe!