Japan Industrial Output:

 Article:Source:

 https://mainichi.jp/english/articles/20221130/p2g/00m/0bu/013000c

Article:

TOKYO (Kyodo) -- Japan's industrial output in October fell 2.6 percent from the previous month for the second straight month of decline, mainly due to weak overseas demand amid economic slowdowns in China and elsewhere, government data showed Wednesday.

The seasonally adjusted index of production at factories and mines stood at 95.9 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report, issuing a downgraded assessment that output is "moderately picking up but showing weaknesses in part."

The decline followed a downwardly revised decrease of 1.7 percent in September.

Ideas:

Industrial output is never exactly linear, as there are going to periods of both up and down, as weak demand shows, and or logistics challenges and or course parts and supply challenges show.

All agencies like to show signs of improvement such as the moderately picking up but showing weaknesses in part."

If we were to try and put a value on what 95.9 meant in the index it would be interesting to see just what that means in lost production.

Most likely companies have built into their production output schedules which allow for downtime related to weak demand and so on.

Article:

Of the 15 industries covered by the survey, eight logged output declines and seven showed increases.

Among the eight, the production machinery industry saw the biggest decline of 5.4 percent from the previous month, led by semiconductor manufacturing devices and flat panel display-producing equipment, on weak capital investments overseas, the ministry said.

Electronic parts and devices logged a decrease of 4.1 percent as demand for memory chips for such uses as smartphones and data centers slumped abroad.

Ideas:

Industries are like an economy, which is very complex as at any time there some sectors that are doing better than other sectors, such as a market economy.

Its impossible to expect all 15 industry sectors to have positive output results every month or, every quarter, or even every year, and there are just too many variables in involved which can be positive and negative and even at the same time.

As Japan is heavily dependent on overseas demand it also means many of the factories it has overseas is dependent on consumer demand which leads to more or less capital investments for its factories overseas and those in Japan too.

Article:

The seven industries reporting output rises included auto manufacturing, which saw an increase of 5.6 percent from the previous month led by compact cars, according to the ministry.

The index of industrial shipments decreased 1.1 percent to 94.1, while that of inventories fell 0.8 percent to 103.0.

Ideas:

Most likely global consumer demand related to cars as improved, but at the same time, because of higher fuel prices, consumers are choosing compact cars to reduce how much they spend at the gas stations.

Inventories can mean several things such as a decrease in inventories might mean production is unable to keep up with demand, it could demand is there but production is lacking for many reasons.

If inventories were increasing significantly than we might conclude demand is decreasing and production keeps its output level the same.

Article:

Based on a poll of manufacturers, the ministry expects industrial output to rise 3.3 percent in November and climb 2.4 percent in December.

"We would like to continue keeping a close eye on the impact of the potential expansion of coronavirus infections, parts supply shortages and price increases," a ministry official said.

Ideas:

Projections of 3.3 percent and 2.4 percent are just "best guesses" as there are just too many variables that can change it to 3.5 or 3.2 and or 3.0 and or 2.5. 2.2 and so on.

Parts supply shortages and price increases are variable that maybe can't be controlled perfectly and as a result that might be part of the mix in variables that can disrupt industrial outputs in the future.

Once again projections are just guesses as there are just too many variables, both positive and negative, which can affect any of the 15 industrial sectors in the future.

Have a nice day and be safe!

Japan Automakers:

 Article Source: https://mainichi.jp/english/articles/20221129/p2g/00m/0bu/039000c

Article:

TOKYO (Kyodo) -- Major Japanese automakers' combined global output grew 14.4 percent to 2.11 million units in October from a year earlier as parts shortages prompted by the coronavirus pandemic receded, their data showed Tuesday.

Six of the eight automakers, or all but Nissan Motor Co. and Mitsubishi Motors Corp., reported increases in output, although it remains unclear whether they can sustain the uptrend amid a continued shortage of semiconductors and China's COVID-19 lockdowns.

Toyota Motor Corp. said its global output grew 23.0 percent to 771,382 vehicles and its global sales climbed 22.8 percent to 832,373 units in October, both eclipsing the previous year's figures for a third consecutive month.

Ideas:

Automaker's output can sometimes be very cyclical or seasonal, depending on consumer demand, logistical challenges, and now the continued challenges of a shortage of semiconductor and the China situation.

Nissan might still be suffering from the Ghosn situation as they are still trying to work their through what happened.

Mitsubishi isn't the most popular brand out there so who knows why they dropped output.

It's no surprising that Toyota had excellent growth and probably will continue to show sales gains as global sales and constraints begin to decrease.

Article:

Honda Motor Co. saw its October output rise 1.1 percent to 330,002 units, marking a fifth consecutive month of increase. Suzuki Motor Corp. advanced 14.1 percent to 267,337 vehicles on the back of growth in its Indian production.

Subaru Corp.'s output soared 43.1 percent in the month to 88,457 units. The company said the impact of the shortage of parts using computer chips remains, but it has become smaller compared with the previous year.

Nissan's output was down 2.4 percent to 297,801 vehicles, falling below the previous year's output for the first time in four months.

Ideas:

Its very interesting that Japan has able to support eight car companies while the US maybe has three not counting Tesla. But of course the difference between Toyota and Subaru is significant. 

But in most instances, like the airline industry, the larger companies probably have shares of the smaller companies, which provide funds and support to the smaller companies.

A 2.4 percent decrease in output related to Nissan might not seem like much, it is significant for example related to sales projections, profit expectations and shareholders.

Again, as big as Nissan is, it might just be Nissan is still going through a period of re-organization after the Ghosn situation.

But again, carmaker output is not always linear or show growth consistently and again there are many challenges. Perhaps Nissan had some logistics and or supply challenges which slow down production.

Article:

Mitsubishi, whose output in Asia declined, said its global output in October also dropped 17.6 percent to 86,533.

The combined domestic output of the eight automakers climbed 36.1 percent to 655,459 units, while Honda and Mitsubishi reported a decline year-on-year.

Toyota's domestic output expanded 33.7 percent from a year earlier to 203,149 vehicles, while its overseas output rose 19.5 percent to 568,233 units, with Chinese production increasing 18.4 percent and North American production growing 16.2 percent.

Its domestic sales, including those of minivehicles, soared 34.3 percent to 113,723 units, and overseas sales rose 21.2 percent to 718,650 vehicles, with North American sales jumping 26.8 percent. The figures for overseas production and sales were both record highs for October.

Ideas:

Perhaps as supply prices increase along with energy prices, car makers might have had to increases like all companies and as a result, consumer demand might have been as robust as expected.

But overall, it seems output is healthy and significant for most companies. Toyota, continues to lead the pack while Honda and Mitsubishi are lacking behind.

But it must be remember that all car companies in Japan might have different car niches and don't make the same types of cars or trucks or vehicles. 

For example some companies seems to be focused on the smaller box type cars. Some might be focused on electric vehicle type cars. Some might make only special niche market cars or trucks for example for India.

Maybe only Toyota can do everything but the smaller companies such as Subaru and or Mitsubishi focus on very limited niche markets. 

Have a nice day and be safe!

Japan Job Availability:

 Article Source:

 https://mainichi.jp/english/articles/20221129/p2g/00m/0bu/028000c

Ideas:

Japan’s job availability of course was going to improve and Japan has moved out of the pandemic period for the most part.

The service sector obviously saw the biggest increase as the hospitality industry saw customers return to restaurants, hotels, and airlines for the first time in two years.

The job availability ratio of 135 openings to every 100 jobs seems very good. But we need to be careful as to what kinds of jobs are being offered. Are they full benefit type jobs or are they just contract type jobs, which unfortunately is where Japan might be headed or has been heading toward.

As the government resume is domestic travel program and has allowed international travel to begin again, it means the services and hospitality industry can finally begin to get back to some kind of normalcy and begin to add more jobs.

There was a 29.3 percent increase in the accommodation and restaurant sector which was not surprise as that industry lost a lot of jobs during the pandemic period.

The wholesale and retail sector also saw an 11.7 percent increase in jobs which means maybe customers are back spending again.

At the same time the number of job seekers declined 0.8 percent, which sometimes like much but still a significant number.

There are two ways to look at the decline in jobs seekers here. One being that maybe they are satisfied with their jobs and they feel they don’t need to look at other job offers, The other idea is maybe the jobs being offered just aren’t they are looking for at this time.

Another way to look at at is the workforce of today in Japan is not the same workforce of twenty years ago and new workers are looking for something different than what their parents had.

For sure the labor market has not reached the pre-pandemic level and may not for a year or so and the Japanese economy continues to recover the pandemic along with high inflation.

As the article states there are labor shortages in the hotel and food services industry in Japan. And yes, employers, as the article states, will need to offer more attractive wages, better working conditions, and better benefits to attract the best workers possible.

Again, workers today are not the same a twenty years ago, and if the stats are correct they can pick and choose just what job they want as there are 135 jobs for every 100 jobs seekers.

The unemployment rate in Japan stood at 2.6 percent, which is very good related to advanced countries.

There were 650,00 who voluntarily left there jobs which might mean they had better jobs offers and were willing to change jobs, which 410,000 left involuntarily which might mean some workers in Japan might still be losing jobs and the Japanese economy hasn’t fully recovered just yet.

For men in Japan the unemployment rate was 2.8 percent which again, related to advanced countries is sill very good. For women the rate was 2.3 percent which mean women found jobs more easily than mean.

But it should be remembered that many women in Japan work part-time and or not the higher level executive type jobs that mean traditionally hold.

And yes, as the article states, the Japanese manufacturing industry could face challenges because of the possible recession globally in 2023 as Japan relies heavily on exports.

And yes, as the article states, full recovery of labor demand in all sectors is still to come.

Have a nice day and be safe!

Japan Companies To Increase Prices:

 Article Source:

 https://mainichi.jp/english/articles/20221127/p2g/00m/0bu/018000c

Ideas:

Its not a surprise that companies are considering increasing prices.For a long time companies were reluctant to increase prices and maybe they were afraid to lose too many customers.

Maybe at this time, the weak yen as just pushed material costs too much and now they have no choice. As before they probably absorbed the increased costs, but now maybe its too much for many companies.

23 percent are thinking about price increases while 49 are undecided, which indicates still many companies might be reluctant to increase prices.

Again, if the yen had not depreciated as much but shipping and material costs had risen in normal way, maybe companies wouldn't be considering prices hikes.

As prices have increased the highest since 1982, its inevitable that there are going to be some price hikes. For example 13 percent said they haven't raised prices, while 29 percent said they had once, while those who increased prices prices twice were 14 percent. 

Those who increased prices four times were at 3 percent and those who did five or more time were at 4 percent. 

Also of note, of the companies that increased prices, they could only expect to retrieve 70 of the increased costs, which means They know they are not going to get a full return on the increased costs.

For example one company president said its inevitable that there will be decrease in sales volume.

The same company plans to increase prices by more than 20 percent,which of that 20 percent increase in prices the company might get maybe 14 percent return in their price increases.

With regards to wage increases, only 6 percent plan on increasing wages because of the higher commodity prices, while companies thinking of wage increased stood at 18 percent, and 3 percent said they are not going to increase wages.

The survey said 30 percent  are not sure of wage increases while 33 percent didn't say what they are going to do .

There were 107 companies in the survey, so that is a very small or respondents who plan to increase wages despite the pleadings of Prime Minister Kishidas pleading for companies to increase wages.

Many companies might be thinking about wage increases and or they would like to increase wages, but because their profit margins are too thin to think about it.

And or perhaps Japanese companies are too concerned with shareholders these days and not so concerned with employees. 

Eventually the market might have something about as some companies begin to offer good salary increases and and or they understand in order to keep good employees they have to offer wage increases on a timely manner.

Have a nice day and be safe!

 

Tokyo Consumer Prices:

Article Source:

https://mainichi.jp/english/articles/20221121/p2g/00m/0bu/032000c

Ideas:

Consumer prices are increasing which means consumers are losing extra income and or not able to do much else as they continue to cut back on extra spending

The Japanese economy, in regards to consumer spending, is not going to see much growth in the 4th quarter or even in the 1st quarter of 2023.

The sharp depreciation of the yen has made price increases even more apparent with no end in sight for price increases.

It must be remembered that the Bank of Japan’s 2 percent inflation target is really aimed at consumer demand and consumer spending and not related so much to wholesale price increases.

Most likely the 2014 and 2019 sales tax increases were just as difficult on consumers as the 1989 3 percent sales tax increase.

The Bank of Japan might be correct in keeping its ultralow rate as there are many side effects to a higher rate which could cause even more challenges to the Japanese economy

As the US and the EU increase their rates the variance between the US dollar and the Japanese yen becomes wider and wider.

Governor Kuroda might be right but tell that to the average business owner or the average consumer who has to live through the high inflation.

Consumer sentiment is everything as if consumers don’t feel good about the economy, don’t feel good about prices, or don’t feel good about their wages they are not going to do much extra spending in the economy.

Pent-up demand will only last so long as households feel the reality of the higher prices related to inflation.

As energy prices increase along with electricity and gas prices along with food prices that means less and less extra income or disposable income available for use on other things in the economy including dining out at restaurants, buying extra things on Japan Amazon or Yodobashi Camera for example.

Gasoline prices might have decreased 0.8 percent but that is just a drop in bucket for consumers who need extra relief from continued inflation.

City gas prices and electricity prices increased 33 percent and 26 percent respectively, and again, less and less disposable or extra income for other spending in the economy.

Just because the current inflation is not backed by wage growth or strong domestic demand, as the BOJ says,, should be reasons alone for the BOJ to do something to help businesses and consumers.

Commodity prices are not the fault of businesses or consumers yet the Bank of Japan doesn’t seem to take that into account as the Bank of Japan keeps saying they are only temporary and will not last forever.

Have a nice day and be safe!

Japan Economic Recovery:

Article Source:

Article Source: https://mainichi.jp/english/articles/20221124/p2g/00m/0bu/068000c

Ideas:

A moderate recovery is probably all that can be expected of the Japanese economy at this time, as inflation will continue to weigh on the economy.

Private consumer or consumer spending might be improving related to services but overtime it might begin to slow down as inflation begins to take its on households.

The Cabinet Office or any government office always wants to show things are improving, even if they aren’t exactly.

Public investment is a cyclical indicator, as its not always in the process of happening and over any time it be up and down.

The economy might actually be picking up moderately but an economy is very complex organism and different sectors grow differently. While some grow a lot, some grow slowly, and some don’t grow at all, which is the nature of a market economy.

Again consumer spending might have picked up, especially for services such as dining out but it might not last that long with inflation continuing to increase, which will decrease the extra income consumers have.

Its good that the domestic travel program was started again as that should help hotels, restaurants and so on and the overall services sector and or hospitality sector.

An eight wave might be in Japan but so far, hopefully there will b no restrictions like in past.

Rate hikes can be both a positive and a negative, as the higher rates can discourage borrowing and discourage even consumer demand overall.

For Japan, the BOJ might be correct in keeping its ultralow rate policy, while what the US and the EU is doing might be right for them too.

Exports might be flat but just what does that mean exactly. Does it mean exports are not growing significantly or just not growing like in the past.

Business investment is another cyclical indicator and business investment is never constant. Some months are always more than other months as the business cycle shows.

Private consumption or consumer spending might be recovering moderately, but, again, inflation will constrain spending as prices continue to reduce the extra income that households have.

The fact that the 3^rd largest economy contracted by 1.2 percent shows the economy is not really recovering as expected, and its going to take time for the Japanese economy to fully recover.

Private consumption or consumer spending as always been the weak link in the Japanese economy, as the average Japanese consumer just doesn’t spend like the average US consumer.

The Japanese government plan of a 29 trillion economic package, while good, might not be enough to help those in need.

Only time will tell how much is needed and if the 29 trillion is really that effective.

Have a nice day and be safe!

Japan Inflation:

 Article Source:

 https://mainichi.jp/english/articles/20221121/p2g/00m/0bu/032000c

Ideas:

It seems kind of late that the Japanese government is maybe just now addressing the inflation situation as this seems to be an on-going challenge that consumers and businesses see only too well.

Japan can’t blame the Russia/Ukraine war as this has been a challenge for the most part since the pandemic started.

Of course there is concern that a global slowdown can have major challenges for the Japanese economy, as Japan relies heavily on exports.

If the Japanese economy is becoming as severe as they say, again, why did they wait so long to finally begin to support the livelihoods or the Japanese people and business activity.

It seems at time, Japan, and all governments are reactionary and only respond until a crisis happens.

A budget of 29.1 trillion might not be enough if the economy is really in that bad a shape.

While a 5,000 yen a month savings is a good start but how far will that take a family whose disposable income and or extra income has been greatly reduced from increased energy costs, increase fuel costs, and so on.

Japanese policy makers might seen inflation as being transitory, not permanent, but tell that to the average family and average businesses and see what they say about it.

Consumer sentiment, or feeling toward spending is only going to get worse, especially if they don’t see any real wage growth in the future.

It must be remembered that the Bank of Japan’s 2 percent target is not really related to wholesale inflation or an increase in wholesale prices but more aimed at consumer demand and consumer spending which is not where they should be at this time.

And it highly unlikely that businesses are going to increase wages to 3.6 percent to match inflation which is needed to satiate workers and consumers in order to get them to spend in the economy.

No disrespect but just what does “a new form of capitalism” really mean. And just how does Prime Minister Kishida plan on redistributing wealth in the Japanese economy from major companies to regular families.

Estimates are always guesses and never accurate so the idea of a 4.6 increase in GDP might be a little ambitious and the Japanese economy has not grown that fast in decades.

For example for the July-September quarter the Japanese economy shrank 1.2 percent, so just how can there be the expectation of 4.6 economic growth.

In the past, as long as inflation and the yen was stable Japan didn’t worry too much about an occasional trade deficit because exports were always strong enough to overcome, overtime, the temporary trade deficit.

Japan and the BOJ might be correct in keeping rates low as maybe the Japanese economy is not very strong and can’t handle the extra side-effects from increased rates.

Japan also should, at this time, ignore those who talk about the the high debt to GDP that has as the Japanese economy needs some major re-engineering to help it overcome its current situation.

Have a nice day and be safe!

Japan Consumer Spending:

 Article Source:

:https://mainichi.jp/english/articles/20221119/p2a/00m/0bu/016000c

Ideas:

Its no surprise that inflation is hitting 80 percent of households in Japan and that they are cutting back on spending as needed.

The area that most families probably struggle with is food prices and the survey results are no surprise.

As household budgets become more compromised its not a surprise again that 79 percent are economizing,

With 42.6 percent they are reducing travel and leisure, it doesn’t bode well for the domestic travel industry.

Even a 32.9 percent decrease on clothing for women and a 28.3 percent decrease in cosmetics and beauty-related products, again consumer spending is going to drag down economic growth in the future.

Even after-school lessons are being cut as families just can’t afford the extra costs when they budgets are severely compromised.

This might cause a significant variance between the rich, who probably don’t feel a lot of stress with their budgets and average families who probably use the after-school lessons needed to get into the better schools.

The Bank of Japan has got to realize what inflation has done to the Japanese economy and need to make changes to level the variance between the yen and and they US dollar.

As utility bills continue to increase that could mean less extra or disposable income that can be used in the economy.

The article doesn’t mention those above 65 that might be in fixed or limited income, which are probably even more compromised related to their budgets and their food costs which probably make up a larger part of their budgets

Only time will tell how all of this is going to play out for the Japanese economy.

Have a nice day and be safe!

Japan Consumer Prices

Article Source:

https://mainichi.jp/english/articles/20221118/p2g/00m/0bu/016000c

Ideas:

Japan’s consumer prices continue to increase which means consumers are going to continue to reduce their purchases which doesn’t help the economy grow.

Most consumers only have so much extra income to use in the economy and then they begin to look for less expensive products/services and or they begin to cut back in what they buy.

The Bank of Japan seems to claim that high energy prices and raw material costs are a temporary situation.

But the average Japanese consumer might see it differently as they are the ones having to live with inflation on a day by day basis.

Wage hikes are definitely needed to help consumers but they might be a long time coming and or if there are wage hikes they won’t be enough to satisfy most consumers/workers.

For example with increases of 5.9 percent it’s hard to imagine most companies are going to increase wages 5.9 percent as they have been reluctant to do anything for a very long time.

Prime MInisters Kishida can beg/plead all the wants but companies are not going to do much as they are probably either focused on keeping shareholders happy and or their profit margins are just too thin for any real wage hikes.

It must be remembered that the BOJ’s 2 percent target was/is focused on consumer demand and consumer spending and not the increase in whole prices.

The sharp depreciation of the yen, which has been controlled recently, is still a concern for businesses and consumers and they probably don’t see much change overall.

Consumers and businesses are probably going to take an even more deflationary approach and look for less expensive products in many areas of their lives and businesses.

As inflation continues to cause challenges in the Japanese economy, more consumers are going to reduce spending which is not going to help the economy grow.

Have a nice day and be safe!

Japan Trade Deficit:

 Article Source:

 https://mainichi.jp/english/articles/20221117/p2g/00m/0bu/024000c

Article:

TOKYO (Kyodo) -- Japan posted a 2.16 trillion yen ($15.5 billion) trade deficit in October, a record for the month, as imports surged to their largest amount on higher energy prices and the yen's sharp slide, far outpacing exports, Finance Ministry data showed Thursday.

Imports, which were at a historical record high, jumped 53.5 percent from a year earlier to 11.16 trillion yen led by crude oil, liquefied natural gas and coal. Exports gained 25.3 percent to 9.00 trillion yen after shipments of cars and electronics components increased, highlighting strong overseas demand.

Comparable data became available in 1979.

Ideas:

Even though imports surged due to the weak yen, as long as exports are in demand Japan doesn't need to worry too much.

As the BOJ has said the increase in raw materials and energy inflation is only as temporary situation and Japan only need to worry as long as there is strong demand for Japanese exports.

And if the BOJ can maintain control of the weak yen and not let it get any lower the variance between the yen and dollar should be manageable.

Article:

For the past six months, Japan has seen a record trade deficit for each month, as rising energy and raw material costs have dealt a blow to the resource-scarce nation. October marked the 15th straight month of red ink.

The yen's rapid weakening has magnified that impact, prompting Japan to intervene in the foreign exchange market by buying the yen for U.S. dollars to slow the Japanese currency's decline, likely on multiple occasions in October.

"The weaker yen boosted imports, and exports are falling in terms of volume. Japan's trade balance will likely remain deeply in the red for the coming months, though the deficit may become smaller," said Kota Suzuki, an economist at Daiwa Securities Co.

Ideas:

Even though exports might be falling in terms of volume, it's still enough as there as there is strong demand for Japanese products. 

As the BOJ has said, again, the increase in inflation is most likely just a temporary situation and could be smoothed over soon meaning inflation will begin to stabilize and then eventually begin to decrease.

Imports and exports are both a positive and negative situation for the Japan. While the weak yen is good for exporters, they have at the same time have to deal with increase energy and raw material costs in their production plants. 

Article:

Higher auto exports to the United States helped Japan report a trade surplus of 720.36 billion yen. Both exports to and imports from the United States hit their highest levels for the month.

U.S.-bound exports climbed 36.5 percent to 1.78 trillion yen while imports advanced 47.1 percent to 1.06 trillion yen.

Increased imports of smartphones and personal computers led Japan to post a trade deficit of 671.35 billion yen with China, a major trading partner.

Ideas:

Thankfully for Japan the demand in the US seems to be very strong despite the inflation issues. 

Once again Japan shouldn't be too concerned with the value or amount of imports from the US but continue to focus on exports to the US which seem to be very strong at this time.

The situation with China is a different story as China might still be experiencing supply challenges and there is still the potential with shutdowns due to the virus situation.

Related to smartphones and personal computers companies like Lenovo and Huawei and others for smartphones must be relatively strong in Japan related to demand for their products. 

Which kind of got me thinking has Japan given up on the smartphone market and companies like Samsung and now Chinese smartphones seems to be increasing in Japan.

Article:

Imports from China jumped 39.3 percent to 2.39 trillion yen, which compares with exports that rose 7.7 percent to 1.72 trillion yen.

Japan's trade deficit came to 152.97 billion yen with the rest of Asia, including China, and 214.11 billion yen with the European Union.

The weaker yen has been eating into national wealth in recent months, with the nation's current account surplus in the six months to September shrinking to an eight-year low of 4.85 trillion yen, more than halving from a year earlier.

Ideas:

If Japan is concerned about its current account then yes, they should be concerned about the trade deficit. But again as long as exports can remain strong it should be a temporary situation.

Japan had many years, if not decades of trade surpluses so they should still have a strong current account even though the Japanese government are usually big spenders compared to other countries.

As as trade remains strong and the global economy remains somewhat strong Japan should not worry too much even though its has a year or two of trade deficits.

Article:

The value of imported crude oil per kiloliter gained 79.4 percent in October from a year earlier in yen terms, according to the ministry.

Daiwa Securities' Suzuki said the impact of the weaker yen on exports and imports will become "neutral," as the currency's rapid depreciation has temporarily halted and commodity prices, which had surged earlier, have stabilized. But he is cautious about the outlook for exports.

"Shipments to China are expected to decrease despite expectations that Beijing will end its zero-COVID policy because real estate troubles remain and there are concerns about economic slowdowns in the United State and Europe," Suzuki said.

Ideas:

As always there are positives and negative in all economies and the imports and exports will balance themselves out over time.

Yes, there should be some caution as 2023 has the potential for some kind of recession, either a weak recession or a much stronger recession situation.

It's interesting again how much, including China, how integrated the global economy is when real estate challenges in China worry global investors. And of course again there is the potential for a recession in 2023 in the US and the EU.

Article:

Japan's economy unexpectedly contracted in the three months to September, weighed down by soaring import costs that count as a negative for gross domestic product, and slowing growth in consumption.

Aggressive monetary tightening in the United States and other advanced economies have raised concerns about slowing exports from Japan going forward, coinciding with worries about a slowing Chinese economy due to its zero-COVID policy and property woes.

Ideas:

As the Japanese economy opened up more and more businesses and consumers increased their activity eventually reality set in with inflation increasing they most likely reduced their activity despite the enthusiasm before that time.

Consumption or consumer spending has never been a strong point for the Japanese economy as the Japanese, for the most part, are not big spenders like consumers in the US.

If wage increases could ever grow to the point that consumers and workers really feel good with with their extra income then maybe consumer demand and consumer spending can play a bigger role in economic growth in the Japanese economy.

Have a nice day and be safe!

Bank of Japan:

 Article Source: https://mainichi.jp/english/articles/20221114/p2g/00m/0bu/029000c#cxrecs_s

Article: 

TOKYO (Kyodo) -- The Bank of Japan will maintain an ultralow rate policy amid heightened uncertainty over the global economy caused by policy tightening in other economies, while keeping close tabs on the financial market impact of rate hikes overseas, Governor Haruhiko Kuroda said Monday.

In a speech to business leaders in the central Japan city of Nagoya, Kuroda stuck to the view that a recent pickup in inflation, driven mainly by higher commodity prices and a weaker yen, will not be sustained, even as the nation has seen a broadening of price hikes by companies.

The central bank has said its 2 percent inflation target should be attained in a stable and sustainable fashion supported by robust wage growth. Despite the headline inflation figure in Japan topping that threshold in recent months, Kuroda has ruled out the possibility of a near-term interest rate hike because inflationary pressure is expected to ease.

Ideas:

The Bank of Japan must know something that other central banks around the world not know and or feel the Japanese economy is so weak it can't handle the side effects of higher interest  rates.

Whatever the reason, there are still side effects related to a low rate, such the variance between the US dollar and the Japanese yen. 

Robust wage growth might not happen as quickly as the BOJ wants as many companies, especially small and medium sized companies have no plans to increase wages at this time.

Article:

"At present, the Bank of Japan deems that it should continue with monetary easing and thereby firmly support economic activity," Kuroda said in his speech.

"By doing so, it aims to provide a favorable environment for firms to raise wages and to achieve the price stability target in a sustainable and stable manner, accompanied by wage increases," he said.

As the BOJ's monetary policy, partly blamed for accelerating the yen's sharp decline of late, has come under greater scrutiny, Kuroda has stressed the need to retain the existing policy framework to foster wage growth, a key factor in achieving inflation supported by strong demand.

Ideas:

There are positive and negative side effects to both increasing the rate and not increasing rate.

The Bank of Japan appears to have chosen the idea that not increasing the rate is the best strategy for the Japanese economy at the present time.

Wage growth is not going to happen until companies feel comfortable with their profit margins and they feel the future looks better regarding demand for their products and their energy and material costs decrease enough they can then see their profits margins get back to some kind of normalcy.

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Monetary tightening in advanced economies like the United States and the eurozone has raised concern about a global economic slowdown. Kuroda said it is necessary to "carefully monitor" the impact of such moves, including adjustments in asset prices and capital outflows from emerging economies.

Market participants have been on alert for any signs of slower policy tightening. In recent days, the yen has risen sharply against the U.S. dollar, in a reversal of its sharp decline to a three-decade low, as markets expect the Federal Reserve to be less aggressive in hiking interest rates.

"The government has intervened in the foreign exchange market multiple times and the abnormally one-sided and rapid weakening of the yen appears to be taking a pause. I believe this, in and of itself, is a very good thing," Kuroda told a press conference after his speech.

Ideas:

Monetary tightening has we see can have some negative side effects including the possibility of a global economic slowdown in the future.

The US Federal Reserve has indicated recently that is rate hikes won't be as strong as the there were. Which good be a good sign for Japan has maybe the variance between the yen and the US dollar might not be wide.

However, the BOJ might need to continue to intervene in the exchange market to make sure the yen pauses from its sometimes rapid increase in value.

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"Commodity prices have already started to trend lower and the strong dollar will not last forever. Under such circumstances, it is certain that the impact of higher import costs will wane," he added.

Most of the recent rise in consumer price inflation came as companies passed on rising import costs, inflated by the weaker yen.

While the yen's rapid decline has created a headache for resource-scarce Japan, the economy likely grew in the July-September quarter, though at a much slower pace than in the preceding three months.

Ideas:

Commodity prices might be trending lower but probably still too much for businesses and consumer overall.

Companies in Japan appear to be less reluctant to pass on their costs to the next in the  supply chain like before as their profit margins become less and less.

The Japanese economy most likely grew in the July-September quarter but it's nowhere near where it should be which is why the BOJ might continuing to keep the current rate low.

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The BOJ chief said the economy will be aided by the emergence of demand that had been depressed by the COVID-19 pandemic and a recovery of inbound tourism going forward.

For the economy to see stronger demand, wage growth will be vital as the recent bout of inflation is weighing on consumer sentiment.

Ideas:

Pent-up demand will help the Japanese economy but for only so long as inflation worries will keep some or many consumers from spending in in 2019 before the pandemic.

Inbound or international tourism will definitely help some but not significantly until China is able to overcome its challenges as the bulk of international tourists to Japan were the middle class Chinese with money to burn.

Again wage growth might not happen when the BOJ wants it to happen as companies have to feel good about the future and about their current profit margins.

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Prime Minister Fumio Kishida is asking companies to offer pay hikes that can keep pace with accelerating inflation when labor-management wage negotiations commence early next year.

"The rises in prices to date will likely be reflected to a considerable extent in the outcomes of the next annual spring labor-management wage negotiations," Kuroda said, while noting that wage developments should be carefully examined.

Ideas:

Prime Minister Kisida keeps asking companies to increase wages but few or not many seem to be able at this time.

The emphasis seems to be on keeping shareholders happy and not so much on keep workers happy. 

Small and medium sized companies have recently come out and said they have no room for wage hike as their profit margins are compromised due to energy and materials cost increases along with the yen's variance with the US dollar.

Have a nice day and be safe!