Japan Economy Watchers: Updated Jan. 26

 Article Source:  https://mainichi.jp/english/articles/20220112/p2g/00m/0bu/041000c

Article:

TOKYO (Kyodo) -- Business sentiment among workers with jobs sensitive to economic trends in Japan rose to the highest level in 16 years in December, as confidence among retailers grew toward the year-end holidays amid relatively subdued coronavirus case numbers, government data showed Wednesday.

The diffusion index of confidence in current conditions compared with three months earlier among "economy watchers," such as taxi drivers and restaurant staff, rose 0.1 point from November to 56.4, the highest reading since December 2005, according to the Cabinet Office.

The figure, further improving from the eight-year high in November, advanced for the fourth consecutive month. It was the second-highest level since comparable data became available in January 2002.

Ideas:

December is always a good month, as its the Christmas holiday season and then the Japan New Year, week long holiday period helps too.

And of course December was just before the omicron explosion hit Japan, so confidence among many in the services sector was probably high at that time.

But just because some were feeling more confident doesn't mean all is/was well in Japan and the services sector, where the most of the economy watchers work. 

The services industry is still not where is should be and even now, with omicron variant exploding to a new high of 60,000 cases, probably the so-called economy watchers again are feeling a little nervious about the future.

But then again, just maybe, some people are not as concerned about the omicron variant as they were about the delta variant and of couse when it all started in the spring of 2020, as more people get vaccinated and many now getting the booster shot.

Article:

A reading above 50 indicates that more respondents feel conditions are improving than worsening. The office polled 2,050 workers from Dec. 25 to 31, of whom 1,796, or 87.6 percent, responded.

The Omicron coronavirus variant was first confirmed in Japan on Nov. 30 and its first community transmission on Dec. 22 in Osaka Prefecture, just before the survey was conducted.

The office maintained its assessment of the economy from the previous month, saying it "is picking up though concerns remain over the coronavirus pandemic."

While sentiment among eateries declined 6.1 points from the previous month to 62.1, that of retailers rose 3.0 points to 56.7.

Ideas:

The survey are just surveys, meaning just numbers. As conditions change, some people might change what they think and feel. As the virus has now exploded again it remains to be seen just how many people will be out and about compared to for example the delta situation.

Are they going to refrain from going out or are they going to ignore the virus situation, as much as possible and just go and do what they want, as much as they can.

As sources have said, some companies have gone back to working from home and not having their employees from working in the office.

Retauarants might have a reason to be concerned, as unfortunately they are hit with government emergency measures to close early and not serve any alcohol, which means potentially they again might lose a lot of customers, especially the ones who prefer to eat and drink late at night.

For department stores and large supermarkets it might not be as big a negative for them, but can potentally still be a problem if customers decide to not shop as much. 

But from some department stores the size and layout of their stores could cause some challenges. For example at the Sogo department store in Yokohama station, the first floor area is a very compact area, with pastry shops, bento shops, food gift shops, and at the back-end is the supermarket. The area is always crowded with single file walking in many areas of the first floor, at least before the pandemic.

It was be best if Sogo limited the number of people it allows into its first floor, to keep everyone safe as the virus explodes. But then there are up to 9 floors, maybe more, that they need to control at the same time. So a potential logistics challenge for Sogo.

Article:

Many workers seemed to be heartened by more people going out and growth in seasonal demand for the Christmas and New Year holidays, a government official said.

A department store worker in the South Kanto region, eastern Japan, said customers are returning since the latest state of emergency has been lifted, noting "solid sales of formal wear and robust stay-at-home demand such as for Christmas cakes and 'osechi' New Year dishes."

On the northern main island of Hokkaido, a travel agency worker said new bookings are increasing due to "recovering demand" for trips such as people returning to their hometowns or taking winter excursions such as for snowboarding.

Ideas:

The christmas and New Year holiday period probably brought a surge in customers and sales that no doubt many relailers needed. 

But most likely it is going to be short-lived and or very brief surge in sales as the omicron variant reality again begins to set in and some customers decide to not go out as much.

But then again, just maybe, customers will not be as worried about the omicron variant that they were with the delat variant.

A lot  is going to depend on just how the Japanese media and the Japanese government provides information about the omicron situation. If both groups err on the side of caution and or too pessimistic it might discourage too many people from going out and participating in the economy, which is going to add further stress to the already stressed-out services sector.

However, if they maybe take a more balanced approach, as they know people are vaccinated and getting booster shots, as a way to try and maintain as much economic activity as possible in the Japanease economy, while still maintaining some emergency measures.

The Japanese government might take a more balanced approach as a way to not scare people and to try and keep as much econmic activity going but if the media only talks about the virus situation 24 hours a day on TV or on webpages, it might be too much for some people and they again become too cautious and don't go any where or do anything.

For example whether good or bad, since 3/11, anytime there is some kind of earthquake and or tsunami situation, such as after the Tongo incident it seems the Japanese media, and especially NHK, is broadcasting information and news about the situation, it seems like all day long. Of course after 3/11 maybe they feel they need and have to give as much information as possible,and they feel they need to do it as a commuity service.

I have a subscription to Japanese TV on my computer so I have NHK and other stations on all day long. 

So again as the cases get over 60,000 as they are now, if all the media does is produce news and information about the new omircon situation 24/7, it might cause some or many to not go out and participate in the economy.

But travel might be a challenge, as only time will tell, if people will move around to other areas beyond their present city or prefecture.

Article:

However, some workers voiced concern over gasoline and kerosene prices remaining at high levels and uncertainty over the Omicron variant, the survey showed.

"We're worried that expenses for dining out and traveling will be curbed because of the spread of the Omicron variant and price hikes for fuel and food items," said a hotel staffer in the Hokuriku region in central Japan.

Looking ahead, the diffusion index gauging business sentiment in the coming months fell 4.0 points for the second straight month of decline to 49.4, falling below the boom-or-bust line for the first time since August, when parts of the country were under a COVID-19 state of emergency or quasi-emergency.

Ideas:

The Japanese government, as of this writing, has just stated they are going to provide subsidies for oil distributors as a way to limit the increases in energy prices that are now affecting many in the Japanese economy.

As when it will help those in the economy such as businesses, who then might not have to increase their prices remains to be seen.

But its a good first step. In one  the blogs here I wrote the idea of subsidies and or price controls on energy prices. But subsidies if done correctly can act like prices controls, where oil producers now don't have to or need to pass on their increased costs to the next in the supply chain and thus not hit consumers who maybe already have limited extra income to use in restaurants, department stores, coffee shops and so on.

Business sentiment it seems is a very complicate measure and businesses are always watching and seeing the conditions everyday and they are never really sure these days, after 2 years what is going on and what is going to happen in the future.

So its not surprising that the business sentiment, feeling, index is not in the positive zone just yet. Of course the new omicron situation might cause even more negative feelings for some, as the numbers continue to increase.

Have a nice day and be safe!