Japan big makers' confidence improves as auto output recovers: BOJ
Ideas:
Business confidence in Japan has not been too good recently as the Japanese economy has been stagnant for a long time. At the same time the Chinese economy is not doing too good and the US economy is going to be very uncertain with the new administration coming in soon.
In today's global climate with all or many countries, including China interlinked, protectionist trade policies are not good for any country or economy, so it remains to be seen how the new trade policies will be implemented in the future.
The Toyota group situation a while back has taken some time for all concerned to get back to some kind of normal or new normal from the fall out related to Toyota and its subsidaries.
Most likely the Toyota group or some of those responsible for the testing situation might have been under a lot or pressure to pass the cars in the testing as Toyota wanted to keep production on schedule and didn't want to fall behind.
But in the end they still feel behind with having to halt production on three of the models affected in the testing situation.
Business confidence is a murky area, as you sometimes don't know really what companies are thinking or what they are going to do in the future, as they might say one thing in public but keep their real feelings quiet related to the future.
Those who benefitted the most in the resumption of the three models as Toyota were the parts makers who might be parts suppliers and rely heavily on cars companies to order parts from them, and most likely many of these companies are small and mid-size companies.
The services sector is a mix of a large group of sub sectors, such as the hotel sector, the restaurant sector, the entertainment sector, the dept. store sector and so on, so its hard to identify exactly which were positive and which were negative related to the service sector sentiment.
Most likely as inflation has continued to affect the Japanese economy, the hotel sector and maybe the restaurant sectors were somewhat positive as maybe they has solid sales related to foreign tourists in Japan, while the the other sub sectors might have seen less consumer spending from regular Japanese consumers has the limited their spending.
At the same time, even though there were many foreign tourists in Japan, at record numbers the hotel sector has had a lot of challenges related to increased wages and labor shortages, as their profit margins might too thin for wage increases and as there is a labor shortage now in Japan they can't attract workers if they can't meet the wage demands of the potential workers as they have many choice to choose from.
At the same time, as there are many hotels to choose from in Japan, hotel prices might be elastic for consumers, as if the price is not to their liking they can easily find a different hotel online.
Also maybe many hotels are reluctant to pass-on their price increases to their customers as again, they are worried about potential customers choosing other hotels, due hotel rates that they might not like.
The US dollar trading at 146.88 compared to 145. 15 could means millions of dollars depending on if a company is an exporter or an importer, as Japanese export companies benefit from a weaker yen while Japanese importer do not benefit from a weak Japanese yen as their import prices go up.
The Bank of Japan will make a decision based on both internal and external data for its next move.
Even if all of the data is in line, internally, the BOJ might look at the external data as being more important as Japan is heavily dependent on the US economy and the Chinese economy related to exports and imports.
There are many factors that the BOJ will use to decide on a rate increase as they might rank all of the factors as to which ones are more important for the Japanese economy than the other factors.
Before even before they get to the meeting they might have made up their minds as to what to do, and the meeting might just be a formality to just review what they know and what they are going to do.
The Japanese economy might be gradually improving but its said before as one quarter its improving and then the next quarter it becomes stagnant again.
It seems the BOJ has not really done much related to foreign exchange rates, as it seems the BOJ wants to keep the Japanese yen weak, as it helps Japanese exporters, and Japanese foreign investors, and of course the weak Japanese yen, has brought in record numbers of foreign tourists who spend a lot in Japan.
The BOJ is always concerned about what the financial market think and they are going to watch very carefully how the markets react to the Fed meeting just before the BOJ meeting.
Once again, sometimes you can't figure out exactly what companies are thinking and especially they might be positive or might be negative.
Have a nice day!
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