Sales of Mobile Phones down 25.5% YOY; below 40 million units for 1st time in 10 years

In another sign of weak consumer demand; mobile phone sales were down 25.5% in 2009 compared to 2008 and the total 31.30 million units, slipped below 40 million units for the first time in 10 years.

The rate of year-on-year decline was the sharpest on record.

http://www.breitbart.com/article.php?id=D9DOM85G1&show_article=1

How Japanese Students Live

More than 10 percent of Japanese university students living away from home receive no allowances from their parents, breaking the threshold for the first time since 1970 when such data became available.

The economic slowdown since September 2008 has continued to affect students' lives, as those without allowances from parents hit 10.2 percent in the survey conducted in October and November last year, up from 8.3 percent the previous year.

The average amount of money parents give to their children a month also fell to 74,060 yen, a level last seen in 1983 and 1984, before the bubble economy and down 27.6 percent from a record high 102,240 yen in 1996.

The survey also showed a growing dependency among students on scholarships as their recipients account for 37.2 percent of those surveyed and the average amount of a scholarship stands at 60,650 yen a month, topping the 60,000 yen mark for the first time.

Students living by themselves spend an average of 23,350 yen on food every month, down 1,080 yen from the previous year. The amount is the lowest since 1976.

http://www.breitbart.com/article.php?id=D9DPBJIG0&show_article=1

Toyota City Businesses Worried by Toyota Shock II

An article in Time today describes the worries of small businesses in Toyota City; where 77,000 of a total of 420,000 inhabitants work directly for Toyota; and the majority of the rest of whom either work for Toyota's supply chain or whose businesses indirectly service those workers.

The article describes a pharmacy whose sales are still 20% below levels achieved before the Toyota Shock and cafes whose sales are 50% down.

The article describes the unease felt in Toyota City and in the greater Nagoya region from Toyota's current Prius recall problems http://www.reuters.com/article/idUSTRE61851220100209 ("Toyota Shock II") which was decimated by the impacts of the Toyota Shock.

http://www.time.com/time/world/article/0,8599,1963322,00.html

Why Japan's Debt Problems are overstated

There has been much hand wringing outside Japan about Japan's JGB debt. Standard & Poor’s, recently warned that it might lower Japan’s credit rating.

But the FT thinks that talk of a massive JGB bubble – let alone default – is farfetched. The government has spent to keep its economy going. That, combined with falling tax revenues, has pushed the country’s gross debt towards 200 per cent of gross domestic product. With an ageing population, this alarming figure could get worse. However, the 10-year JGB yield, is at about 1.3 per cent, looks low.

First, Japan’s debt, after netting off the state’s own holdings, is less than 100 per cent of GDP.

Second, the cost of servicing its debt is low, at roughly 1.3 per cent of GDP. That compares with 1.8 per cent in the US, 2.3 per cent in the UK and 5.3 per cent in Italy.

Third, Japan has fiscal wiggle room: sales tax is just 5 per cent.

Fourth, 95 per cent of Japan’s debt is domestically owned. Japan’s problem is still an excess of savings. Banks are awash with deposits that they need to place somewhere.

But the FT is more critical about BoJ's efforts to fight deflation suggesting it should increase its purchase of JGBs, monetising part of the debt.

http://www.ft.com/cms/s/0/cb125274-14e3-11df-8f1d-00144feab49a.html?nclick_check=1

Bank Lending Falls by most in 4 years in January

Japanese bank lending fell by the most in more than four years in January. According to the Bank of Japan, lending, excluding loans by credit associations, dropped 1.7 percent last month from a year earlier, the largest decline since September 2005. The drop, amid a five-year low in demand for loans, compares with a 1.2 percent contraction in December.

With more than a third of factory capacity sitting idle in Japan, companies remain reluctant to increase spending even as the economy recovers from its worst postwar recession with larger companies looking to bond markets which are showing signs of life.

Acom Co. and Nippon Building Fund Inc. sold bonds in January for the first time since 2008, and were among 32 Japanese companies to issue bonds since the start of the year. Bonds issued by Japanese companies rose by 50 percent in January to 795 billion yen ($8.9 billion), from 529 billion yen in the same month a year earlier, Bloomberg data show.

Machinery orders, an indicator of business investment, plunged to a record low in November. Large companies plan to cut capital spending 13.8 percent in the year ending March, according to the Bank of Japan’s Tankan survey.

Lending by Japan’s 10 so-called city banks, including Mitsubishi UFJ Financial Group Inc., fell 3.4 percent following a 3.1 percent drop the previous month, the Bank of Japan said.

“Companies aren’t willing to take on the risk of increasing borrowing and spending amid deflation,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo.

http://www.businessweek.com/news/2010-02-08/japanese-bank-lending-declines-most-in-four-years-update3-.html

Salaries Continue to Fall

On 2nd February, the Ministry of Health, Labour and Welfare released its figures on wages for December 2009 and for 2009 as a whole.

December saw a YOY fall of 6.1% in wages at firms with more than five employees, with the average total wage clocking in at 549,259 yen. Bonus payments fell by 10.6% against a year ago. December’s fall follows a 2.4% decline in November. At companies with 30 or more employees, the average wage fell by 6.6%, following a 2.8% decline in November.

For 2009 as a whole, average wages at firms with five or more employees fell 3.9%, with salaries falling 1.2%, overtime pay plunging 13.5% and bonuses seeing a 12.1% drop. This equates to an overall decline of 2.9% in real wages.

The average number of hours worked fell 2.9% in 2009, while overtime hours fell 15.2%. The manufacturing sector recorded a 32.2% decline in overtime hours.

2009 is the third consecutive year in which average wages have fallen.

The statistics also confirmed the continuing trend from full time to part time employment as in 2009, the number of regular full time workers declined by 0.9% to 32 million while the number of of part-time (or short-term contract) workers increased by 2.6% to about 12 million.

http://www.mhlw.go.jp/english/database/db-l/index.html

Nagoya Shock - Mark II

Shukan Taishu describes how Toyota's problems have extended into the "pink" businesses around Toyota City; with decreasing demand caused by Toyota's problems (which have impacted salaries in the area) filtering down into the entertainment industries.

http://www.tokyoreporter.com/2010/02/03/toyotas-tremors-send-sex-businesses-sagging-in-japans-detroit/

Japan's Greying Population

The SMH reports on the push back from right wing groups on proposals to provide municipal voting rights to the almost 500,000 special permanent foreign residents, mostly ethnic Koreans and Chinese, born and raised in Japan after their relatives were brought over by force or the war economy.

In addition to the 1 million permanent-resident foreigners, another 1 million foreigners are registered to live and work in the country. Together they make up just 1.6 per cent of the population. Australia's foreign-born population, by contrast, accounts for more than 20 per cent.

Present trends show that Japan will lose 70 per cent of its workforce within 40 years, by which time more than 40 per cent of the population will be made up of retirees.

Some politicians have called for a drastic increase in the intake of skilled immigrants to rescue the workforce from collapse. But wariness of foreigners retains a powerful grip on the national consciousness.

However, despite the reality being that expansive immigration policies or an increase in birth rates being the only answers to Japan's population problems; an aggressive policy of deportation has cut the number of illegal immigrants by more than half since 1995, from 300,000 to 130,000.

http://www.smh.com.au/world/japan-grapples-with-greying-needs-20100205-nir8.html

December CPI Falls at Fastest Rate since records began

On 30th January 2010, the Financial Times reported that -

Japanese consumer prices in December fell at the fastest rate since records began in 1971, highlighting the risk of a deflationary spiral.

The so-called core-core consumer price index, which excludes food and energy and so shows underlying inflationary pressure, was down 1.2 per cent on December a year ago. That is steeper than the declines in 2001 that prompted the Bank of Japan to launch its liquidity-boosting policy of quantitative easing.

Other data released yesterday - on unemployment, industrial production, housing starts and household spending - were upbeat, suggesting that Japan's recovery is still on track but slack in the economy is not being used up fast enough to stop deflation.


Excluding only fresh food, prices fell 1.3 per cent year on year in December, less than the 1.7 per cent fall in November. But preliminary data for the Tokyo area in January showed declines accelerating from 1.9 per cent to 2 per cent.


In other aspects of the economy, a slew of data suggested that growth in the October-December quarter was strong. The seasonally adjusted unemployment rate fell to 5.1 per cent in December from 5.2 per cent in November.

Industrial production rose 2.2 per cent from the previous month, and manufacturers forecast further rises in January and February...

The key question for Japan is whether the manufacturing recovery, driven by exports to Asian neighbours, will continue long enough to absorb unemployed workers and reduce deflationary pressure.

Only $30bn raised by Private Equity Real Estate Funds in 2009

PERE reports that -

With just $30.4 billion of capital raised for value-add and opportunistic private equity real estate funds in 2009, it’s fair to say fundraising in the past year was austere.
Compared to the peak of 2007, when global fundraising efforts corralled more than $85 billion, 2009 was down by roughly two-thirds. Even judged against 2005 standards, 2009 fundraising for closed-ended, commingled property vehicles was no bonanza. In 2005, when PERE first started collecting data, GPs raised some $37.4 billion in capital commitments.

No question, the past year was a humbling one for all concerned. And managers are craving fresh funding. According to PERE data, there are currently more than 240 real estate equity funds in the market trying to raise capital.

The major issues being that investors are less enthusiastic about the commingled fund model citing lack of liquidity and control; and a movement towards direct investments and separate accounts for specific investments.

The market for fund raising for real estate funds remains difficult and it is unclear how the model will develop in 2010

8 Department Stores Set to Close During 2010

The closing of the Seibu Yurakacho store will be the 8th department store set to close in 2010 which compares to the peak of 11 closures recorded in 2000.

Tough competition from "fast fashion" retailers, such as H&M of Sweden and Uniqlo, which offer fashionable clothes at relatively low prices was blamed for its decline with H&M which opened a large outlet, its first in Japan, in Ginza, near Yurakucho, in September 2008 and Uniqlo's Ginza shop expanded its floor space by 50 percent last October.

According to the Japan Department Stores Association, total domestic sales fell 10.8 percent to 6.58 trillion yen in 2009, dipping below the 7 trillion yen mark for the first time in 24 years.

In May 2009, Mitsukoshi's Ikebukuro and Kagoshima outlets closed, followed by Sogo's Shinsaibashi main store in Osaka in August.

Marui Imai's store in Muroran, Hokkaido, shut down on Jan. 20, and Matsuzakaya's Okazaki, Aichi Prefecture, outlet will follow Sunday.

Isetan Co. will close its Kichijoji store in western Tokyo on March 14.

http://www.asahi.com/english/TKY201001270401.html

Foreign Tourists to Japan Fall by 18.7% to 6.79m in 2009

http://www.breitbart.com/article.php?id=D9DEGPHO0&show_article=1

Price Competition in Retail Market Fuelling Deflation

The Japan Times reported on Fast Retailing Co., the operator of the Uniqlo casual clothing chain, record profits and profit growth driven by low price fashion wear and customers campaigns.

Similarly, Seven and I Holdings Co., which operates the Ito-Yokado supermarket chain, posted a ¥218.3 billion operating profit for the March-November period, up 4.4 percent from the same term the previous year, although it expects its profit to ease by 11.3 percent to ¥250 billion for the full year to February.

In the recent months, price competition has intensified in many parts of the retail industry — apparel, furniture and food — which appears to have accelerated Japan's deflationary trend.

Young people jumped on jeans priced below ¥1,000. Fast Retailing surprised consumers last March by launching its g.u. jeans for ¥990 a pair, triggering a race to release lower-priced jeans with Aeon Co., Daiei and Seiyu Ltd., a wholly owned subsidiary of U.S. retail giant Wal-Mart Stores Inc.

In October, Don Quijote Co. also sold 30,000 private-brand pairs of jeans priced at ¥690 in five days.

The trend toward lower prices has now spread to other sectors.

In the furniture market, Nitori Co. started to cut its prices on an additional 400 items in October, after it began announcing a series of similar large-scale price cuts in May.

In the food industry, convenience store chain Lawson Inc. said it aims to boost its value line lineup, most of which are small cooked dishes priced at ¥100, to 1,000 items by April. Lawson's proprietary brand is sold at its Lawson Store 100 outlets and subsidiary Ninety-nine Plus Inc.'s Shop 99.

Shop 99 has seen quarterly growth since last April, bucking the trend at supermarkets.

But only a limited number of retailers are successful, and their successes did not benefit the overall retail market, where sales currently stand about 2 percent lower than the level posted a year earlier, said Taketo Yamate, a retail industry analyst at UBS Securities Japan Ltd.

"The situation is very severe. Current sluggish consumption does not come from withering sentiment but simply from decreasing incomes," he said. "Unless incomes rebound, we cannot expect a better outlook for consumption."

So will consumption rebound?

Yamate believes nationwide income is ready to bounce back by fall because overall overtime work, which he sees as an indicator moving six to 10 months ahead of the income movements, has already bottomed out and is likely to recover by spring.

Yet consumption is expected to recover slowly because the distributive share of labor shows a decline even when listed companies marked record profits from 2002 to 2007. This means, even if the economy recovers in the near future, it is not clear whether salary levels will go up, Yamate said.

http://search.japantimes.co.jp/cgi-bin/nn20100123f1.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+japantimes+(The+Japan+Times%3A+All+Stories)&utm_content=Google+Reader