Toyota Global Output: Updated September 5, 2024.

 

Toyota July global output down 0.6%, smallest decline in 6 months

Article Source:  https://mainichi.jp/english/articles/20240829/p2g/00m/0bu/032000c

Ideas:

Toyota doesn't need to worry that much about its global production as its still the largest car company among car companies globally.

But as things are these days, even a small drop in production or sales can cause a stir among shareholders and investors as companies have no room for any downturn, reduction in production due to factory challenges and so on.

Back in the day, companies could make long-term plans and could stick to the plans even if they had a not so good quarter here or there, but those days are long gone, as now its what have you done for us today, not what are your plans for the future.

Car companies are always experiencing recalls as its nothing new but of course not good, but  its part of the car business as defects often happen sometimes a lot with cars.

Toyota has a lot of models that it produces, and as a result if one model goes down the other models can make up for the lost production, like the Prius did.

Unfortunately, maybe deliberate or a lack of focus, the certification scandal might have been a need to certify cars quickly to keep production targets on schedule.

China is in a difficult situation at the present time, as it economy seems to be going through some kind of transition and Japanese companies maybe relied a little too much on China and its potential.

While the US economy seems to be on solid footing beside the rumblings in the media about the possible recession, which most likely is not going to happen.

The EU is a different situation but, production in the EU for Toyota might still be very good at the present time.

The global sales figures are not bad, except of course shareholders or investors might see things differently as they want increases sales every quarter.

China is following the normal strategy of offering lower-priced cars to overcome the name-brand global cars in the market. Overtime, as the Chinese cars gain more traction, most likely, as always, their prices will increase.

Not all car markets are the same as noticed some markets big be better than other markets, so its a good idea that a car company, or any company can be in a many markets as possible, as there is always the chance a specific market will be down while another market will be up.

Again, a 0.6 percent decline in production is not that much as stops and starts happen all time with production.

But again, as always, the shareholder might not like it if car companies are not producing at full capacity 24 hours a day.

And even more a 05 percent decline globally among all eight major car makers is not that bad, as some might have been better than other or had better July productions than others.

Japan is a major manufacturing production economy, even though, as with all major economies, services make up for most of the businesses in the economy. But Japan seems to be unique, in that it focuses a lot, maybe too much, on manufacturing to grow its economy.

Despite China's struggling economy, which seems to be in some kind of transition period, there is still a lot of competition in the Chinese market and especially as the Chinese car markers are focusing on producing cheaper electric cars to beat the Japanese car makers, which seem to be lacking slightly in the production of electric cars.

Nissan, like Toyota, and even Honda, done't need to worry that much as if they, which are they are, in many markets globally, the drop in China can be made up with increases in the US or even the EU.

As an example global sales increased 0.1 percent even though there was a drop in sales in China.

Have a nice day!

Japan Jobless Rate: Updated September 5, 2024.

 

Japan jobless rate hits 2.7%, 1st rise in 5 months

Article Source:  https://mainichi.jp/english/articles/20240830/p2g/00m/0bu/014000c

Ideas:

Japan has always been a country with good employment numbers and even better with low unemployment rates. But the numbers don't show the real picture, as since 2008, like other countries Japan has moved to more part-time workers and contract workers, which usually don't get full benefits, as way to lower company costs.

The challenge with changing job in Japan it takes a long time to find a new job, but some people are wiling to go through the process and they do eventually find jobs.

The Japanese government wants to stream-line the process to make a more fluid and flexible society so that worker can easily change jobs with no hassle from current employers and less paperwork related to new jobs.

Right now Japan is experiencing a labor shortage, so there should be plenty of openings to choose from for those who quit there jobs, and look for other jobs.

Companies are in a race to hire the best or just to hire enough workers for their company. They have to increase their wages to entice new workers and also improve their benefits, and provide a better work-life experience for their workers.

The challenge, these days, with many companies, is they need to cater to the younger workers to get them to work for them, if they are a traditional Japanese company.

The generation Z workers are not going to do what their parent did in the companies, work long hours or even work on weekends. This is a new era and companies, as much as possible, need to transform into a 21st century company and not a 1950's style company.

There have been past articles suggesting than younger workers are leaving their jobs soon after being hired because they don't get along with the company managers. That can be a two-way street as both sides need to adjust to each other, as managers need to understand the younger workers, and the younger workers need to understand more fully their responsibilities in the company.

The jobs availability ratio doesn't really show the real picture, but maybe it is. For example, is the 124 jobs available for every 100 job seekers just full-time jobs with good benefits, or does it also include part-time and contract jobs which don't provide the same benefits.

Also many service type job, now, to reduce costs, only hire or mostly only hire part-time workers as a way to maintain their profit margins, as service-type companies usually have very thin profit margins and can't afford to have a lot of full-time workers.

Again, Japan is experience a labor shortage in many sectors and the situation doesn't change it could get worse. 

But one thing that can be improved on is getting rid of the mandatory retirement age of 65 as many older workers in Japan want and need to keep working, but Japan seems, like South Korea, seems to be stuck back in the 20th or even the 19th century and maybe they think older workers can't do the work or are not very productive.

In reality, many older workers are more responsible compared to the younger generation of workers, as they come to work on time, they do what they need to do and don't complain about the work, compared to some groups.

Keeping older workers in the workforce, who those who want and need to work also will help with the social security or pension system and those who continue to work pay into the system and will not receive any benefits until they leave.

Companies can also develop a different pay system for older workers who reach a certain age, which keeps them in the company and companies will not suffer labor shortages or as much.

Have a nice day!

Japan Industrial Output: Updated September 4, 2024.

 

Japan industrial output in July up 2.8% on chip equipment rise

Article Source:  https://mainichi.jp/english/articles/20240830/p2g/00m/0bu/020000c

Ideas:

Japan might follow the industrial output more closely than other countries as manufacturing is still a major sector in the Japanese economy.

While 102.8 is still good its shows a trend of decrease of 4.2 decrease in June in manufacturing in Japan, which might have been attributed to the Toyota situation.

Japan is still playing catch-up with Taiwan and South Korea related to the semiconductor sector global race, as Japan has fallen significantly behind its two main rivals.

"Fluctuating indecisively" might the an understatement as the Japanese manufacturing sector as been up and down for many years due to the pandemic and the the global semiconductor shortage that hit global supplies significantly.

Yes, a an optimistic view at this time might not be correct but improving might be a better description of the manufacturing industry at this time.

Then, recently this year, there was the Toyota Motor Group situation which shutdown production at Toyota and other car companies that used fake data.

All sectors don't grow at the same speed, as some grow faster than others and some might decrease from quarter to quarter.

The industrial sector is a mixed bag of many different companies as sub-sectors as again, they are not all the same and they have different situations, different customers, different material needs and so on.

But again, as Japan is heavily focused on manufacturing and production, they watch all of the sub-sectors very carefully and they all contribute one way or another to the economy.

The index for industrial shipments is good as anything over 100 is a good number. For inventories, its seems good too, but need to be watched carefully as whenever there is a significant increase in inventories might mean demand is down, and or production estimates were not estimated correctly, leading to an increase in inventories.

Again, most of the time, manufacturing will have some up months and then some down months for a number or reasons, so possible decrease in September should not be a surprise.

And yes, Typhoons in Japan has significantly affect production as again Japan is a major typhoon region, which means there are usually typhoons in Japan in August and September.

Have nice day!

Japan Government Economic View: Updated September 4, 2024.

 

Japan gov't raises economic view in Aug. for 1st time in 15 months

Article Source:  https://mainichi.jp/english/articles/20240829/p2g/00m/0bu/045000c

Ideas:

The Japanese government, like all governments, want to show a positive view of its economy, and with good reason, as citizens begin to feel better about the economy, and don't want to hear gloom and doom, they might begin to spend in the economy and do things that lift up the economy, and Japan is no different than any other country in that regard.

"Recovering at a moderate pace", again, is a positive take on the economy, while later is says "pausing" which might lean more toward what is happening.

Especially now, during the extreme hot summer heat wave, consumers might not be spending as much or doing as much outside. 

Another article has suggested that once the temperature gets above 35 C that consumer spending goes, down, while usually in the summer  consumer spending increases.

To be fair, economies don't always grow in a linear fashion or always upward, and the Japanese economy is no exception as in the past there have been periods of up and down.

While the 3.1 percent growth for the April-June period is very good, the next quarter might  be so good or even much less than hoped for or expected, as, again, the summer heat wave might be limiting consuming spending.

There is also the Obon summer holiday period in Japan, which might or might not be as robust as previous years, and again the summer heat wave, and the current typhoon season might hurt the Japanese economy.

Amy growth or increase in consumer spending is good in Japan, as Japanese households usually don't spend like US consumers.

Consumer spending or private consumption, while maybe 50 percent of Japan's GDP is always a challenge, as Japanese consumers don't spend up to the potential of the Japanese economy. That might be a good thing or not a good thing, as Japanese consumers, for the most part, tend to be more savers than spenders.

The Japanese car industry, is a major economic driver of the Japan economy. An economic driver is anything that significantly increases economic growth. 

While the Toyota group situation, the fake testing situation, might have caused some pause in production, there is just too much demand for Toyota cars for the fake testing situation to cause that much harm.

The extreme heat can be both a positive and a negatives, as again, anytime the temperature gets above 35 C consumer spending or activities outside might be reduced.

But,yes, AC's saw a huge demand and or course the Paris Olympics helped the sale of TV sets in Japan, like almost all countries.

Outbound travel, or travel by Japanese travelers overseas have been hit with the weak Japanese yen, which makes the US dollar or the Euro much stronger, which means the purchasing power of Japanese travelers is much weaker.

Housing construction, being "almost flat", means it probably is not going to improve that much now or in the future, and for the most part, inflation is still a challenge in the Japanese economy, which means maybe home buyers are not that interested at this time.

If the Japanese government, again, doesn't say anything negative, it might mean several things, such as they don't want to say anything not so good as this time, and just maintaining the current position and or in a waiting situation or sectors to improve and then say something positive about the Japanese economy.

The global economy is always in a state of flux as not all countries grow or change the same, so its normal to say possible signs or pause in some areas.

The global economy is like a country with many different sectors in a market economy, and they all don't change or grow the same, as some improve while some don't improve, and its the same with each country's economy.

Have a nice day!

BOJ Comments: Updated September 4, 2024.

 

BOJ prepared to raise rates if prices move in line with estimates

Article Source:  https://mainichi.jp/english/articles/20240828/p2g/00m/0bu/021000c

Ideas: 

After a decade or so of the ultra-low monetary policy, perhaps the Bank of Japan is starting to get back to near-normal monetary policy that changes as the economy changes.

The BOJ did increase the rate, slightly twice recently, but as the financial markets remain somewhat volatile or shaky, they might wait until October or even November to make another move.

But the key will be the 2 percent inflation target, as the BOJ has been waiting for inflation to get the 2 percent level, before making any real significant moves.

The BOJ is looking for inflation that is consumer led along with companies that increase prices as consumes buy more or their products, not inflation related to increasing prices due to increase in energy or raw materials.

Yes, the BOJ most likely will not increase the rate in September and maybe not even in October, as the Japan summer heat wave is causing havoc among Japanese households and now its the typhoon season, which causes more havoc in the Japanese economy.

The Bank of Japan is not going to do anything that will upset the markets or Japanese businesses as they are for the most part, "do no harm" focused, and even any rate increases will be limited as to not cause any serious side-affects to the Japanese economy. 

While the US and maybe the EU allowed side-affects, or new of the side-affects the Bank of Japan has repeatedly said the Japanese economy is much too weak for any real rate increases. But that was a few years ago, so now the BOJ might have a slightly different idea.

Later this year could be October or even November or not at all, as the markets were maybe shaken too much with the US news about a possible recession, which of course was not much of anything. as later the news came out the US economy is still strong.

After the historic losses in the Japanese stock market, the BOJ is going to be even more cautious about what it says, as even one news conference or one memo that says anything negative or upsetting could cause the Japanese stock market to go crazy again.

That is the problem with the stock markets, as they are too over-reactive to everything instead of seeing the big picture or taking a long-term view, they react to everything like a young child.

Inflation is a tricky situation as there is inflation related to increases in raw materials and energy, which Japan has to import a lot of, due to it being a resource-poor economy, and then there is inflation related to consumer demand and consumer spending, which is never that strong in Japan or never where it should be, compared to US consumer spending.

The Bank of Japan wants more consumer spending driven inflation and less energy/raw material driven inflation, but as long as the Japanese yen remains weak, imports prices are going to remain high, which means companies will continue to pass-on their costs to the next in the supply chain, including the final retail customer.

Have a nice day!

Japan Rice Shortage: Updated September 4, 2024

 

Concerns over rice shortage growing in Japan amid higher demand

Article Source:  https://mainichi.jp/english/articles/20240826/p2g/00m/0bu/001000c

Ideas:

Consumers, globally, are reactive and or sometimes don't use common sense, as while understanding the fear of the possible mega quake, some consumers can go overboard, as this was quite common during the past pandemic where some people stock-piled masks and other things.

Talking to sources in Japan, there is a real rice shortage, that maybe could been prevented if people just used common sense and didn't panic.

Unfortunately, there is always the possibility of an earthquake in Japan, and for the most part, people go about their lives in Japan, but again with the understanding that Japan is an earthquake region.

Rice is a staple in Japan, but also rice consumption has been declining for years, as Japan and other Asian countries adapt to a more western style of eating.

Calling on consumers to remain calm is a good idea, but some people just don't listen and let their emotions control them.

This is situation is something that potentially is always possible, and if the Japanese government, as some have said, have resource of rice to use in emergencies, that might be a good time to use some of it now.

But the problem is people will then horde the emergency rise as their emotions will get the best of them and they will rush to the supermarkets and the hording will start again.

Supermarkets of course need to limit their supply to one or two bags only per customer, but customers will leave the store and come back again, the next day or the same day and do it again, so supermarkets need to find a way to prevent the cheaters from buying too much rice.

Limiting purchase to one per family is good, but they need to make sure some don't cheat and try to buy more the same day or the next day, so maybe one or two items per week only, if possible.

The problem is consumers don't want to be patient as they are often panic buying or emotion buying and not being patient like during the pandemic.

Restaurants are in difficult situation as maybe they can't make the normal rice offerings and or they have to significantly increase prices to cover their costs.

Again, this situation should have been seen as a possibility waiting to happen and the Japanese government should have had in place emergency measures to prevent such emergencies.

Its not likely that foreign tourists can be blamed for the rice shortage as there are 125 million Japanese and maybe 3 million foreigners to visit Japan each month.

Again, telling people not to panic is easier said than done as again consumers but with their emotions and don't see the big picture of everything that is happening.

Again, the Japanese government should use some of their emergency rice supply and fill up the supermarkets with some rice but not all of the rice. 

Just enough to keep the stores in some supply, and then the stores should limit the purchases to one or two per family.

Have a nice day!

BOJ Chief: Financial Markets Unstable: Updated September 2, 2024.

 

BOJ chief says financial markets remain 'unstable,' watching closely

Article Source:  https://mainichi.jp/english/articles/20240823/p2g/00m/0bu/022000c

Ideas:

There are many ways financial markets can become volatile, or change a lot. Any bad news or not so good news can cause a change and any good news too can cause a positive change.

The Bank of Japan most likely will not change anything soon as long as the Japanese economy is not where they think it should be. They most likely will not increase the rate until maybe October or November at the earliest, as they are waiting for the Japanese economy to settle down after the summer season and the typhoon season.

If there is before then more turbulence in the markets, for sure, the BOJ will say the same thing and wait for a better time.

If the rate hike that was just recently done, if it has too much negative affects on the economy, again, they might wait for a better time.

The BOJ has trying to find ways get out of the ultra-low policy situation that it has been in for almost a decade, but there are just too many parts to be unraveled and it might take some time.

The weak Japanese yen, has both positives and negatives so the BOJ has to look at all sides and figure out what is best for the Japanese economy.

Some have suggested the the Japanese yen is controlling the Bank of Japan and then most likely the Japanese economy. 

That might be so, but to be fair the the Bank of Japan, but besides currency manipulation, which they can't do or shouldn't do, there is not they can do, except try to increase the key rate and get it as close the US rate as possible.

But the problem with that is, there might be too many side affects for the Japanese economy to overcome, which is continuing to be stagnant at this time.

Agreed, for the most part, the Japanese economy has not been a state of deflation for a long  time as inflation continues to control the economy with companies continuing to increase prices.

The 0.25 percent and the 0.1 percent range is not going to affect many Japanese households or businesses. When the rate gets up near 1.0 or 1.5 then it might begin to have some affect on the economy from businesses to households.

For a long time, and maybe true, the BOJ was hesitant to increase the rate as they said the Japanese economy was just to weak.

Unfortunately, whether good or bad, the stock market, globally, reacts to everything and not in a good way as they are like a young child reacting to everything some says or does.

The BOJ should use caution because, again unfortunately, the markets see everything and react to everything, including a one word phrase or something they might not like.

But the BOJ is not going to do anything soon related to increasing the rate, as the hot summer season is continuing and the typhoon season has started in Japan,which is is going to play havoc on the Japanese economy.

So most likely not until October or even November, the BOJ might increase the rate just a little but not too much, as they don't want to have any side affects from the future rate increase.

Have a nice day and be safe!

Japan Core Consumer Prices: Updated August 25, 2024.

 

Japan's July core consumer prices up 2.7% on higher energy costs

Article Source:  https://mainichi.jp/english/articles/20240823/p2g/00m/0bu/018000c

Ideas:

Inflation just continues on in Japan, but its probably the same everywhere in the world at this time.

The Bank of Japan has been trying to get inflation to the 2 percent level for many years without much success.

Some might think 1.9 percent is not that much except when its 1.9 every month it begins to add up over many months and many years, especially for low income and fixed income groups.

The Bank of Japan, while it might be trying it hasn't been very good at curbing inflation or slowing down inflation. But to be fair not much can really be down, as even in the US, while interests were increased, it might have not been a reason for the decrease in inflation.

The weak Japanese yen, is another challenge for the Bank of Japan to solve but so far it has been able to do much. The weak yen has some positives and negatives, but for the Japanese domestic the weak yen pushes up prices and Japanese importers have to pass-on their increased costs to the next in the supply chain, including the final retail customer.

Energy prices globally might be up, but Japan should try, if not yet, to enter into some FTA's with some energy producing countries as a way to reduce import energy prices, as Japan is resource poor country and has to import much of what it needs.

A 22.3 percent increase in electricity, this time of year, during the summer, is probably worse than a cold winter for most in Japan, as now Japanese households have to run their AC's a lot but, like a recent article said, many single family households and maybe many fixed income households have tried to not use their AC's that much to reduce expenses. 

Food prices are another challenges for Japanese households and now, because of the news about a big earthquake has been mentioned a lot in the media there is now a shortage of rice in Japan and rice prices have skyrocketed as people have horded rice in the supermarkets.

And of course rice and other staples are subject to the growing season and if the growing season has some challenges such as a hot summer, the supply might be less, which means of course prices have gone up. 

I doubt, to be fair, that increased consumption of rice by foreign visitors is/was enough to drive up rice prices in Japan, as most likely the not so good growing season was the biggest factor for the increase in rice prices, as the number of foreigners is increasing, is not enough to have an impact on the rice market in Japan.

And yes, maybe many Japanese households bought new AC's because of the summer heat, so maybe Yodobashi Camera, a big electronics company in Japan has had good sales this summer in AC's.

While the Bank of Japan might be considering a rate increase, recent articles have said the BOJ is probably going to wait until the financial markets, in Japan, and globally,  calm down, as the US economy had some not so good news about its economy, but now it seems to be OK, but the BOJ is probably going to wait more.

Most likely, if there is a rate hike, it will be in October or November at the earliest, as even the hot summer is causing challenges for the Japanese economy, along with it being the typhoon season, which means more havoc for the Japanese economy.

The Bank of Japan never wants to upset the financial markets, so most likely they need to communicate what they are going to do with regards to a rate hike or decrease in the future.

The currency market is a different situation compared to the stock markets, both in Japan and globally, as the currency markets or markets usually are not as volatile except in this case the Japanese currency market, lately has been quite volatile.

The coming months are going to be very interesting as its the typhoon season, there are record hot temperatures in Japan this summer and the Japanese economy has not grown that much recently, and then add in the rice shortage, so the coming months will be interesting.

Have a nice day and be safe!

Japan Trade Deficit: : Updated September 1, 2024

 

Japan logs 621.8 bil. yen trade deficit in July

Article Source:  https://mainichi.jp/english/articles/20240821/p2g/00m/0bu/017000c

Ideas:

There are always going to be positives and negatives related to the current account, as imports reduce the current account, while exports increase the current account.

And yes, the weak Japanese increase the value of imports, which means domestic prices will be higher, which seems to make it even harder in Japan, as inflation, since the pandemic has kept prices too high.

Japan is a resource poor country, meaning it has to import much of what it needs, which means its vulnerable to the weak yen and import prices increasing.

Japan, as any country that focuses on exporting, watches its trade balance very carefully, as exports, and especially Japanese cars, have become an economic driver for the Japanese economy, as the domestic economy seems to be stagnant or stuck, without much economic growth recently.

The other economic driver, recently, is international tourism or foreign tourists who spend a lot of Japan is Japan, as the weak Japanese yen gives them more purchasing power and they can buy more which does help the Japanese economy.

Japanese semiconductors are almost a late-comer in the semiconductor industry and South Korea and Taiwan have most of the market share.

It seems maybe the Bank of Japan, while talking about increasing the key rate, might be concerned, with exports losing the value and if the Japanese yen gets too strong it could hurt exports and foreign tourists who flock to Japan because of the weak yen. 

But that might not happen for a while as the weak Japanese yen it tied to the variance between the US rate and the Japanese rate, which is large at this time.

You would think the Bank of Japan would put more emphasis on the domestic economy, but it seems they might be putting more emphasis on anything that increases the current account, which also helps to reduce the Japanese government's huge debt.

It seems, yes exports might be stalling, as the challenge is not with the US but with China, which is going though some growing pains, as with South Korea, maybe Japan became too dependent on trade with China in the last decade.

Yes, volume is everything, while the weak yen does increase the value of exports, the volume or amount of exports is still very important.

The trade deficit, unfortunately reduces the current account, which is needed to help decrease the huge Japanese government debt, which is the highest among advanced economi

Trade with the US is going to have some ups and downs, and that is not really a major problem, as sometimes imports from the US might be more than exports to the US, as trade goes through cycles from time to time.

But trade with China seems to have stalled and might even be on a real decline, and the same in South Korea, as both countries in recent years seemed to rely on trade to and from China a little too much, maybe.

Who know when exactly when China's situation is going to improve as the Chinese economy seems to be going through a transition period at this time.

Yes, imports and exports to and from China increased, but the real challenge is exports to China which seems to be trending down a lot recently,

Trade with China is not dead, its been reduced a lot since the pandemic, and there is still the Japanese seafood ban in China, which blocks any and all Japanese seafood from entering China.

The EU or Europe is a different situation, as maybe the Ukraine war situation is hurting trade and some EU countries are almost in recession mode, compared to the US.

Have a nice day and be safe!

Japan GDP Increases: Updated August 27, 2024

 

Japan's GDP grows 3.1% in April-June as consumption rebounds

Article Source:  https://mainichi.jp/english/articles/20240815/p2g/00m/0bu/006000c

Ideas:

Japan's GDP seems to be on roller coaster ride lately with a couple quarters up and then a couple quarters down, as it not very consistent.

The inflation-adjusted annual rate is just what would happen if the Japanese economy grew at the same rate each quarter, but that is usually not the case as its often very inconsistent.

Private consumption or private spending is never where it should be in Japan as Japanese households never spend like US consumers, as Japanese consumers, for the most part, are more savers then spenders.

Capital spending by companies is usually related to business sentiment, and how businesses feel about the future.

While the Japanese government gave subsidies and tax cuts of 40,000 yen, it doesn't go that far when inflation increases every month, and the 40,000 can be used up very fast in one month.

Japan, for many years and maybe decades didn't see much inflation, so its probably been hard for Japanese households who were more suited to deflation or decreased prices.

Again the stronger-than-expected GDP growth, while not be negative, is not usually the situation in Japan, as the Japanese economy has been stagnant for a very long time.

The auto scandal related to auto testing discrepancies might have abated but the auto industry is going to be watched more closely for now on, and the Japanese government doesn't want another industrial scandal in Japan.

Ever since the pandemic prices have continue to increase in Japan, and it seems, at this time, there is no end in sight for the decrease in prices or even the leveling off of prices.

Domestic demand has never reached it full potential in Japan as, again, Japanese consumers more savers and not big spenders like US consumers.

Private consumption or consumer spending is never that strong in Japan, and recently because of continued inflation, its even less strong.

It might account for half of Japan's GDP, but most likely the level of spending in Japan is never that much, or never that much recently.

Strong demand for cars, while good, is never an everyday thing, as durable goods, such as cars, are not bought everyday but maybe just every few years, if even that.

Capital spending is sometimes hard to figure out as what are companies in Japan doing exactly. For example there is a so-called labor shortage in Japan, and are companies trying to increase their hiring, or are they just tying to use automation to overcome the labor shortage?

Ordinary people sometimes might feel disconnected from all of the news about increased exports and a strong trade surplus, as sometimes there seems to be two different economies related to Japan, one being export and the trade surplus and other being the high prices due to the weak Japanese yen, and which is causing import prices to be high.

Wage increases are good and needed, but the challenge is as 70 percent of most Japanese don't work for large name-brand companies, the small and midsize workers might not have gotten the same wage increases, which means consumer spending might not be where it should be.

But that is a market economy where not everything is equal and there are some who benefit and some who are not so well off.

Prime Minister Kishida can ask companies to increase wages, and some have or many have, but the challenge is maybe some companies and their profit margins just can't handle any real wage increases as they are struggling with high energy and raw material costs.

And then add in the so-called labor shortage, which means companies now that to pay even more for workers and there is a competition for the best talent available in Japan.

The 40,000 yen income tax cut and or subsidy, again, doesn't go very far and inflation can eat into the 40,000 very fast in Japan.

There was strong wage growth for large companies in Japan, but maybe not for the small and midsize companies in Japan, as the most likely got lower wage increases.

And then there is a huge segment of part-time workers and contract workers who never get the same benefits and large company workers so they might have gotten even less in wage increases, if anything at all.

Demand for cars in the US continues to be strong, as the news of a  possible recession was muted with new data so the US economy continues to be the strongest economy in the world at this time.

The Japanese economy seems to be stuck or stagnant for many reasons, such as the low birthrate, lack of favorable immigration policies, and the lack of productivity or innovation among the traditional Japanese companies.

Most likely the high-tech companies are doing their part in increasing productivity and innovation, but the problem seems to be the large traditional companies which are dragging down the Japanese economy.

Maybe it was inevitable that Japan would lose its 3rd place to Germany or any other country, as maybe the US would lose its place to India or China in the future.

Have a nice day and be safe!

Japan Firms and Economy Optimism: Updated August 16, 2024

 

Japan firms less optimistic about economy amid weak yen, inflation

Article Source:  https://mainichi.jp/english/articles/20240811/p2g/00m/0bu/023000c

Ideas:
Even at 70 percent only of companies expecting the Japanese economy to expand, that is still a good number.

The key of course will be consumer spending and whether wage increases will take an effect in the Japanese economy this summer or in the fall.

Inflation and the weak yen, is still going to affect the Japanese economy, as consumer may feel both related to the increased prices related to imports.

Inflation has been affecting the Japanese economy, significantly ever since the pandemic, and it hasn't really come down that much. It is trending down, but not by that much yet.

Japanese companies have some good reasons to be cautious, as the Japanese economy hasn't done much in the last decade.

Consumer spending may or may not improve this summer, as the yet again, the summer heat wave might deter consumer spending, as a Japanese article recently stated when the temperature gets above 35 C, consumer spending might be less than normal.

Capital spending is another animal altogether, but the principle is the same, if companies feel good about the economy, that might spend or they might wait, just like consumers.

Spending by foreign visitors is an important economic activity but it should not be considered an economic driver of the Japanese economy, as there needs to be even more foreign tourist spending in Japan.

But the challenge is, maybe now some might think there are now too many tourists in Japan, but if you compare the number of tourists in Japan with France, Japan still has a long way to go to reach the level of tourists that travel and spend in France.

Consumer spending in Japan is always a challenge and consumer spending is only maybe 50 percent of Japan's GDP, while in the US its over 60 percent. That 10 percent difference might just be the difference in the Japanese economy growing or being flat or stagnant, and if it decreases that makes it even more difficult for the Japanese economy to grow.

An increase in prices, depending on the product or service can affect many consumers or just a few consumers, depending on consumer sentiment, or feeling about price increases.

The weak Japanese yen is both positive and negative depending on whether you are a Japanese exporter or a Japanese importer.

The weak Japanese yen is a positive for Japanese exporters, as it they can get more for their products overseas, but it a negative for Japanese importers, as it increases the price of products brought into Japan.

Until recently, many Japanese companies were reluctant to increase prices and they basically just absorbed their material costs and other costs, and allowed their profit margins to get thinner and thinner.

But those days seem a long time ago, as its a different age in Japan now, as Japanese companies, like western companies, have no problems increase their prices, even for the final retail customer.

The focus now, with Japanese companies, seems to be satisfying the shareholder and not so much customers or even company workers these days.

The Prime Minister of Japan and the Japanese Diet can only do so much, and it has be society related to the low birth rate and the aging population situation, along with companies policies that help working women, and also continuing to allow older workers to continue working and not force them to retire.

Its natural and normal for Japanese companies to focus on Japan, but there might be some benefits to moving operations to another country such as Vietnam, which might be considered the new China in terms of economic growth.

And of course some companies want to be in the US with its huge economy and huge consumer base which might be good for some Japanese companies.

Not wanting to be in China, at this time, is again normal, as the Chinese economy seems to be going through a rather long transition period and who knows exactly when it going to get back to some kind of normal.

Just in the last few days, while there were concerns of a possible recession in the US, new information came out that consumer spending in the US economy increased in July and the recession fears have been reduced greatly.

Stock markets and or financial markets are always jittery about every little thing, and must be taken literally every time there is change here or there in the stock markets or financial markets, and the big picture or the long term is what is most important.

The Chinese economy, might not be back to normal at this time, but if Japanese companies can see the big picture that China as a huge consumer base, like the US, it might be good to remain in China, and stick it out until the Chinese economy eventually gets back to some kind of normal.

Have a nice day and be safe!