Deflation persists, unemployment rises, average wages decline

Japanese machinery orders unexpectedly fell to a record low in November as tumbling domestic demand overwhelmed an export revival. The reports underscore concern that Japan’s recovery from its worst postwar recession has yet to spread from exporters and spur spending by companies and households...

Producer prices fell 3.9 percent in December from a year earlier, the Bank of Japan said today. In 2009, the costs companies pay for materials plunged 5.3 percent, the most since the survey began in 1960, the central bank said...

With more than a third of factory capacity sitting idle, Japanese businesses are reluctant to increase spending on plant and equipment. Separate reports for November showed that the unemployment rate rose for the first time in four months and wages slid for an 18th month.

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The climate for domestic demand remains negative with deflation, excess industrial capacity, high unemployment and shrinking wages. Whilst conditions for the large Japanese exporters have improved; the business climate for businesses reliant on domestic demand remains challenging; with the winners in this sector the low cost clothing and retail chains; fast food outlets and other countercyclical plays.

In the real estate sector; the only subsector which fits the countercyclical definition is the leisure hotel sector; with continued downwards pressure on commercial, industrial and residential.