Japan Nov. Economic Index: Updated Jan. 24

 Article Source:    https://mainichi.jp/english/articles/20220111/p2g/00m/0bu/052000c

Article:

TOKYO (Kyodo) -- A key index reflecting the state of the Japanese economy in November rose at the second quickest pace since comparable data became available in January 1985 due to a recovery in automobile production, government data showed Tuesday.

The Cabinet Office's coincident index of business conditions for the reporting month advanced 3.8 points to 93.6 for the second consecutive month of increase against the 2015 base of 100. It was up 1.1 points in October, when Japan's latest coronavirus state of emergency was lifted.

The pace of increase in November equals that logged in October 2020 and marks the biggest since June 2020.

Despite the fast growth, the office maintained its assessment that the domestic economy is "weakening" for the third straight month, based on its latest three-month moving average.

Ideas:

There are a lot of variables in the economy all interacting at the same time. Some might be positive and some mght be negative. An economy is never linear meaning a complete straight line moving forward.

There are going to periods of fast growth, slow growth, and maybe even no growth, an economy just maintaining and not growing much or not at all. 

Even in periods of relativelly no growth, that doesn't mean economic activity is absent, it means it isn't exceeding the previoud quarter, the same quarter last year, or the year before..

Sometimes, some want to see perfecct growth, or excellent growth from the previous period. But that's not how an economy works. An economy is very complex, with many parts operating/moving at the same time. Again some positives and some negatives all operating at the same time.

The Japanese domestic economy may indeed be weak and not yet ready to be considered a healthy economy as the pandmemic, at the time, was still in full force globally.

Some parts of the Japanese economy may be considered healthy but most likely there are parts that might be considered weak or unhealthy, such as the services sector and especially the hotel, restaurant, tourism, and maybe even the airline sectors of the larger services sector.

Article:

By components, month-on-month growth in the index of shipments of durable consumer goods, including cars, jumped 33.0 percent, contributing the most to the overall advance. Indexes for producer's shipments and industrial production also rose, led by increases in auto-related goods such as engines.

Japanese automakers were showing some recovery from supply chain disruptions since last summer, when factories in Southeast Asian countries, a major production hub, were closed amid a surge in coronavirus infections there, a government official told reporters.

Meanwhile, retail sales value increased 1.9 percent from a year earlier in the reporting month after the Oct. 1 lifting of the state of emergency, in which were asked people to refrain from nonessential outings.

The leading index of business conditions, forecasting the situation in the coming months, rose 1.5 points to 103.0 in the reporting month, following a 1.3 point increase in October.

Ideas:

The manufacturing sector or parts of the manufacutuing sector no doubt are doing much better than the services sector. 

As Japan has always been a manufacturing powerhouse its not a suprise that manufacturing has come back strong, which of course can only help the Japanese economy. 

But it must be remember that the Japanese economy is more than manufacturing. The serices part of the Japanese economy, in itself is much larger than manufacturing. Manufacturing might get most of the news with car production leading the way, but its far from the only area in the Japanease economy.

The serices and tech side of the econnomy, as in most advanced economies today is much larger and probably employs more than the manufacturing side.

But the manufacturing side always gets the news as exports from manufacturers are always seen as more important than for exmaple what some large service sector business or businesses are doing inside Japan.

And for good reason as exports bring in large amounts of cash into the current acount, something like a country's bank account, when the yen is weak, as it is now.

An increase in retail sales is a good sign that maybe now consumers are getting out and about. An increase in retail sales might also mean consumers might have gone shopping at some mall, some department store, or some store inside a subway/train station, and then stopped for lunch or dinnner or stopped at a coffee shop or some other place or places as they were out and about.

But just after this article the omicron virus exploded so as there are now new emergency measures in places, it wil be interesting to see what retail sales will look like at the end of January.

Or just maybe Japanese consumers might ignore the current wave and just go about the day as is, before the omicron wave. 

Of course companies, as sources say, are telling their employees the work from home again instead of going to the office.

That might reduce some consumer spending for the time being.

Have a nice day and be safe!