July - Bad Month and Poor Outlook

Two leading economy watchers have struggled to name a single positive in the nation's current predicament.

Tokyo University's Professor Takatoshi Ito, who had just spent the best part of an hour dissecting the country's economic missteps, eventually plumped for the increasingly entrepreneurial attitude of Japan's women as a sole cause for some optimism.

Nomura Institute of Capital Markets Research senior fellow Chi Hung Kwan had the advantage of speaking second at the forum, where both men were challenged to find a single ray of economic sunlight in Japan.

After an agonising pause, he eventually mumbled something about technology to get himself off the hook.

They were speaking in Tokyo after the Nikkei 225 index crashed through 9000 this week, its lowest level since May last year.

Japanese stocks have been falling in response to the strength of the yen, which is choking export earnings.

The malaise is as bad outside the listed sector, with only about 30 per cent of all companies in Japan booking a profit in the most recent financial year, but tax "minimisation" methods are thought to play a role in the result.

On preliminary figures, Japan's economy grew by an anaemic 0.1 per cent between April and June, snuffing out hopes of a nascent recovery and surrendering its No. 2 size crown to China.

Calls for intervention to devalue the currency grew this week, with Sumitomo Mitsui Banking Corporation president and Japanese Bankers Association chairman Masayuki Oku calling for the government to step into the currency market to bring down the yen's value against the US dollar.

Imagine his groans when the government announced on Monday that Prime Minister Naoto Kan and Bank of Japan governor Masaaki Shirakawa had spoken by phone that day, but did not touch on intervention.

Despite the economic house falling down around their ears, neither Mr Kan nor Mr Shirakawa deemed a face-to-face meeting necessary. Although the strength of the yen, which hit a 15-year high of Y84.72 against the US dollar this month, is certainly hurting Japan's economy and delaying an end to deflation, there are more systemic and long-term problems in Japan, both Professor Ito and Dr Kwan argued during Tuesday's talk about China usurping Japan's position as the world's second largest economy.

He believes China will surge past the US by the mid 2020s as growing domestic demand joins high investment levels in fuelling growth.

"China has become more important, not just as the workshop of the world, but the market of the world," Dr Kwan told the Foreign Correspondent's Club of Japan.

He said China's economy showed many of the characteristics of Japan's economy 40 years ago, as it was about to enter its remarkable bubble period when it, too, threatened to overtake the US in terms of GDP.

He said electricity consumption, life expectancy and infant mortality figures were remarkably close when comparing the two.

Although China's per capita GDP was a 10th that of Japan's, it was on the cusp of a huge expansion before demographics would bring its growth down to 5 per cent in the 2030s, he said.

But for the current decade, Dr Kwan is still predicting growth of 8 per cent in China, tapering to 6 per cent in the 2020s.

The silver lining for Japan, which has forged close economic and diplomatic ties with China, is that its neighbour's growth is propping up Japan's economy.

Dr Kwan said he believed the two economies were complementary, China supplying cheap production and Japan technology and capital.

The only real competition in manufacturing was in low-tech industries where Japanese firms were having to be propped up anyway, he said. Professor Ito said the pain of Japan's two "lost decades" had made its workers and managers too risk-averse and inward looking, adding that its youth, in particular, had become insular and reluctant to leave their home cities, let alone their country, to pursue opportunities.

"Through these decades of stagnation Japan's people have lost their confidence and don't know what to do," he said.

"In that state of mind no one wants to take risks."

Professor Ito blamed political turmoil for the slump, along with "institutional" constraints, or archaic workplace traditions in Japanese companies that prevented hiring the best people regardless of age or gender.

His recipe for reviving Japan includes concluding a free-trade agreement with China to bring some of its manufacturing sector home after dismantling tariff barriers and reforming the country's often-criticised education system.

"If we solve these problems maybe we have the chance to avoid a third lost decade, but I have to say the prospect is not good," Professor Ito said.

http://www.theaustralian.com.au/business/economists-lost-for-kind-words-as-japans-decline-continues/story-e6frg8zx-1225910113673

July - Real Estate Prices Fall in fewer spots

Land prices dropped in fewer locations in July compared with three months earlier, reflecting a nascent pickup in demand for homes, according to a quarterly government survey.

Land prices as of July 1 were down in 105, or about 70 percent, of 42 surveyed residential and 108 commercial areas in major cities, a decrease from 123, or 82 percent, on April 1, the land ministry said.

Prices rose in four locations, up from two in the previous survey, and leveled off in 41 locations, up from 25, the ministry said.

The four locations where prices jumped were two residential areas in Chuo Ward, Tokyo, and Kawasaki, and two commercial areas in Kawasaki and the city of Fukuoka. The 41 locations with level prices included 22 residential areas.

A land ministry official said land price falls have slowed as lower condominium prices and tax breaks for mortgage loans have stimulated demand for homes.

http://search.japantimes.co.jp/cgi-bin/nb20100826a5.html

July - Export Growth Slows for 5th Month

apan's export growth slowed for a fifth month in July, adding to risks in an economy already under threat by the yen's surge to a 15-year high against the US dollar.

Overseas shipments advanced 23.5 per cent in July from a year earlier, less than June's 27.7 per cent, the Finance Ministry said today in Tokyo. The median estimate of 18 economists surveyed by Bloomberg was for 21.8 per cent. From a month earlier, exports fell 1.4 per cent.

Today's report underscores that Japan's export-fueled rebound is losing steam after gross domestic product grew at the slowest pace this year in the second quarter. The yen's advance is also threatening earnings of companies from Toyota Motor to Sony., putting pressure on policy makers to curb the currency's 10 per cent appreciation this year against the US dollar.

''We look for a gradual slowdown in export growth ahead as exports to Asia appear to have peaked,'' Takehiro Sato, chief Japan economist at Morgan Stanley MUFG Securities in Tokyo, said before the report. An economic slowdown in Europe and the yen are also risks, he said.

The yen traded at 84.19 per US dollar at 9 a.m. in Tokyo from 84.23 before the report. It reached 83.60 yesterday, the highest since 1995. The Nikkei 225 Stock Average opened 1 per cent lower, after tumbling to its lowest close since May 2009 yesterday.

Japan's currency has climbed against all of its 16 major counterparts in the past month as concern about the global recovery boosted demand for the currency as a refuge.

Policy makers have failed to formulate a response to the market volatility, with Prime Minister Naoto Kan only asking ministers to come up with fresh proposals to support the economy after an August 16 report showed growth slowed to an annualized 0.4 per cent in the April to June period, the weakest pace in three quarters. He spoke to Bank of Japan Governor Masaaki Shirakawa this week, without discussing intervention in currency markets, which Japan has refrained from doing for six years.

''The root cause of currency strength in Japan is deflation,'' said Jesper Koll, Tokyo-based head of equity research at JPMorgan Chase & Co. ''Clearly there is no one magic bullet, but it needs to be a concerted and coordinated policy effort between fiscal authorities, regulatory authorities as well as monetary authorities.''

One-sided moves

Finance Minister Yoshihiko Noda said yesterday that recent currency movements have ''clearly'' been one-sided, and his remarks failed to stem the gains. The Bank of Japan is considering further monetary easing, the Nikkei newspaper said today, without citing anyone.

Every one-yen gain in the Japanese currency against the dollar reduces Toyota's annual operating profit by 30 billion yen, according to the world's biggest carmaker. Sony, which generates more than 70 per cent of revenue outside of Japan, says it loses about 2 billion yen of annual operating profit for each yen gain against the US currency.

Slower expansions in China and the US, Japan's biggest markets, may also be a drag on the recovery. Manufacturing growth in the two countries has been cooling, pointing to softer export demand, analyst Naoki Iizuka said.

The manufacturing figures ''suggest that the pace of Japanese export growth is likely to slow in the months ahead,'' said Iizuka, a senior economist at Mizuho Securities Co. in Tokyo. ''We expect the slowdown in Japanese export growth to be clearly visible'' in the fourth quarter, he said.

http://www.smh.com.au/business/world-business/japans-export-growth-slow-on-waning-global-demand-20100825-13r3q.html

Women Struggling in Recession

TOKYO - Fifty-one year old Miharu juggles two part-time jobs at a law firm and at a design company, but is barely able to make ends meet in one of the world's richest economies.

In stark contrast to Miharu, who works as an office assistant in her two jobs, is her friend Satoko Kobayashi. A full-time dental assistant and single, the 46-year-old takes home a stable wage and has two annual bonuses that pay for a comfortable lifestyle, one that includes foreign trips and leisure time with her friends.

Divorced a decade ago, Miharu, who asked that her last name not be used, describes her future as bleak.

"I am grateful for having work at my age. But my take home [pay] barely covers my monthly expenses. I dream of quitting the daily grind," she says. On average, her monthly earnings reach US$1,800, two-thirds of which goes to rent, utilities and food.

Miharu, who has a degree in English, quit her job in a trading company after she got married three decades ago and had a child. But when she started looking for work after her separation, she realized how tough life returning to a professional career can be for women of her age or older.

The stories of Miharu and Kobayashi show not only how Japan's economic recession has taken a harder toll on women, but has also helped create a social gap between different groups of working women, says Professor Toshiaki Tachibanaki, author of Greater Choice, Greater Inequality, an analysis of the Japanese economy from the perspective of women.

"Traditionally, older women have always had problems finding stable jobs after they quit once. But with the recession the situation is worse," he said. "With companies cutting costs to meet global competition, women, who also face traditional gender discrimination, are the ones who are hurt most."

In his chapter on women and work, Tachibanaki shows how Japan's male-dominated labor culture - consisting of working hours and regular transfers from head offices to other locations - has squeezed out many opportunities for women to hold on to their jobs after getting married and having children.

When coupled with the current unemployment rate of 5.3% - and 4.9% for women - this tradition translates into an environment that is stacked against stable professional careers for women, Tachibanaki said.

His research shows that the women who stay in the work force are often self-employed, single with full-time careers like Kobayashi, or have rich spouses.

"The others [simply] struggle to survive," he explained at a press briefing.

Labor statistics illustrate this trend. New figures show that women between 20 and 64 years old comprise 13.39% of the working poor in Japan, or far higher than the percentage of men at 9.85%. The working poor are those who earn less than $11,000 annually.

At the same time, women make up the highest number in the expanding market of part-time employees. Women made up 62% of 610,000 part-timers in 2009, according to the Health, Welfare and Labor Ministry. They are usually employed at call centers, office clerks, and work as health care workers or sales representatives.

Part-timers are hired on annual or six-month contracts by companies or are sent to work by agencies under the labor dispatch law. They are paid on an hourly basis, but women are sometimes paid up to 30% less than their male counterparts.

Usually, their employment contracts do not have paid vacation or allowances to support pensions.

In fact, the Tokyo Women's Union fields around 25 inquiries a month, of which 80% are from women in their thirties and forties who report having lost contract jobs because of restructuring efforts in companies.

"Older women are the first to go in a company," said Toyomi Fujii, one of the two advisors in the union. "Their work is considered disposable by male bosses."

A major grouse among Japan's working women is the dispatch temporary work system. Because the job contracts under this system are between the agency and company - not the employees themselves - this often leads to unfair working conditions, Fujii said. It is common to see younger and attractive women hired over older women after their interviews, Fujii said.

These trends are picking up at a time when more married women are seeking jobs, in contrast to two decades ago when more than 70% of Japanese women quit work after the birth of their first child.

The ratio of married women with jobs today is much higher at 48.9% as of 2008, government data say, as women fear that their husbands might lose their jobs.

"Our cases indicate a pattern where women are struggling to survive economically," Fujii said, adding that this trend is likely to persist and widen the gap between those who have stable careers and those stuck in part-time or contractual work.

"Part-timers complain of mental depression, constant sexual harassment from male bosses and having to put in long hours to make enough money. Their lives are poor compared to career women," she said.

Women, both full-time and part-time, comprise 41% of the Japanese workforce of 66.5 million recorded in 2008. Women between 30 to 34 years of age make up more than 60% of employed women, compared to less than 50% a decade ago.

Government data in July showed that only 52 jobs are available for every 100 job seekers.


http://www.atimes.com/atimes/Japan/LH19Dh01.html

Back into Recession?

Japan's economy appears to be at turning point. Real gross domestic product for the April-June quarter grew an annualized 0.4 percent from the previous quarter — much lower than the 4.4 percent for January-March and the 4.1 percent for the October-December quarter. The value of the yen to the U.S. dollar remains near the high level that prevailed 15 years ago, hurting prospects for export-oriented firms.

"Eco-car" subsidies and "eco-point" incentives for purchase of energy-saving products, which helped underpin consumer spending, will end in September and December, respectively. The government and the Bank of Japan must take fiscal and monetary measures to prevent another dip in the Japanese economy.

A Kyodo News survey of 107 major firms — the results of which were released Aug. 16 — shows that 80 percent of them expect the economy
to deteriorate in the October-December quarter or in the first quarter of 2011.

Economic activities in the April-June quarter were supported by exports, which increased 5.9 percent from the previous quarter. But prospects for economic recovery in the U.S. and Europe are weak. Even the Chinese economy is slowing down. Exports to the U.S., Europe and emerging economies are likely to become weak.

Consumer spending, which accounts for some 60 percent of GDP, only grew 0.03 percent. The end of "eco-car" subsidies and "eco-point" incentives for other products will cause consumer spending to drop, thus making makers cut production. Although capital spending increased by 0.5 percent, the Kyodo News survey hints that enterprises may become reluctant to increase capital spending later on because of pessimistic prospects.

Nominal GDP fell an annualized 3.7 percent, the first drop in three quarters, and the GDP deflator dropped 1.0 percent, compared with a 0.3 percent rise in the previous quarter, indicating that Japan is in serious deflation. The unemployment rate was at 5.3 percent in June — worsening for four straight months. The problem is that the government is slow in response and the BOJ does not appear to have a sense of crisis. They must carry out timely measures that are effective.

Consumer Goods Companies Continue to Roll Out Lower Prices

Each week, it seems, brings news of another Japanese company rolling out a low-end product line. Lately, those moving downmarket are getting smarter about how they do it.

The step-down reflects the harsh reality of Japan's economy for most consumer-goods companies. Earnings are being squeezed by thriftier shoppers and falling prices overall.

Last week, cosmetics maker Shiseido said it too will market a line of lower-end products. The company's earnings growth is still robust-operating profit rose 57% last quarter-but it's losing market share to rivals with cheaper products.

http://online.wsj.com/article/SB10001424052748703748904575410801372024486.html

Okura Buys JAL Hotels for Y6 billion

Hotel Okura Co. announced Friday that it has decided to purchase a majority stake in JAL Hotels Co., a hotel operating unit of struggling Japan Airlines Corp.

Hotel Okura, based in Tokyo, said it will acquire 79.6 percent of the shares in JAL Hotels in late September. It said it will basically keep on 980 employees of JAL Hotels.

It did not disclose the price for the acquisition but sources familiar with the matter put it at roughly 6 billion yen.

The Hotel Okura group runs 16 hotels in Japan and five overseas, according to the company's website. JAL Hotels operates 39 hotels in Japan and 18 abroad under the Nikko and JALCITY brand names.

http://www.breitbart.com/article.php?id=D9HE02GG0&show_article=1

Q3 - Toyota Posts Profit

Toyota Motor Corp. said Wednesday it logged a ¥211.66 billion group operating profit for the April-June period, reversing a ¥194.86 billion loss in the same quarter last year, due mainly to brisk sales in emerging Asian markets, including Thailand and Indonesia.

A recovery in the North American market as well as cost-cutting efforts also helped, more than offsetting the negative impact of the yen's rise against the dollar and the euro, it said.

The world's biggest carmaker said its group net profit stood at ¥190.47 billion, against a ¥77.82 billion loss a year earlier, on sales of ¥4.87 trillion, up 27.0 percent.

"Despite the yen's upward trend, our operating profits are on a recovery path," Senior Managing Director Takahiko Ijichi said at a news conference in Tokyo.

Toyota is forecasting further improvement despite some uncertain factors.

It now expects group operating profit for the six months to September to grow to ¥270 billion, up from its previous forecast of ¥100 billion announced in May, and a ¥250 billion group net profit against its previous forecast of a ¥150 billion profit.

For the full year, it expects a ¥330 billion group operating profit, up from its previous forecast of ¥280 billion, and a ¥340 billion net profit instead of ¥310 billion.

"Still, we have some volatile factors for the future," Ijichi said, including the outlook for the yen against the dollar and the euro, the impact on the domestic market after the government subsidies for fuel-efficient cars expire in September and uncertainty in the European and North American markets.

As for costs for massive recalls starting late last year, Ijichi said the company can't disclose specific figures, but the costs for the current business year to March won't be as high as they were in the last business year.

http://search.japantimes.co.jp/cgi-bin/nb20100805a1.html

H1 - Mcdonalds Sales Grow by 2.9%

McDonald's Holdings Co. (Japan) Ltd. said Wednesday that sales at all McDonald's outlets in Japan — both directly controlled and franchise shops — in the January-June period increased 2.9 percent from a year earlier to an all-time high of ¥268.30 billion .

McDonald's Holdings, the Japanese subsidiary of the U.S. hamburger chain, attributed the favorable result in the first half of the current business year to the popularity of its new menu, including the Big America series of burgers.

Operating profit jumped 51.8 percent to ¥14.63 billion.

But net profit dropped for the second straight year to ¥2.07 billion, down 58.7 percent, due to an extraordinary loss of ¥10.38 billion in connection with the closure of outlets to streamline operations.

McDonald's Japan closed 211 restaurants in the six-month period as part of its plan to shut down 433 unprofitable outlets in the current business year. The company was operating a network of 3,484 outlets as of the end of June.

Under McDonald's consolidated bookkeeping system, it adds up royalties from franchise shops — rather than the entirety of sales — and sales at directly controlled shops for the group's consolidated sales.

http://search.japantimes.co.jp/cgi-bin/nb20100805a2.html

H1 - Car Output grows by 16.2% for Toyota

The nation's automakers on Tuesday reported sharp increases in global production for the first half, and for June in particular with Toyota seeing a 16.2 percent surge, underlining a recovery in demand from a dismal plunge a year earlier.

Toyota Motor Corp. said it produced 739,683 vehicles in June as sales grew in Japan and abroad and exports expanded to North America, Asia, the Middle East and Africa.

For the first half, Toyota's worldwide production totaled 4.36 million vehicles, marking a 46.8 percent rise from the previous year — underlining the company's recovery from a battering by global car recalls and the financial crisis.

Nissan Motor Co., which is allied with Renault SA of France, reported June worldwide production of 354,425 vehicles, up 38.8 percent from the previous year, as global sales marked a record for the month of June.

For the first six months of the year, Nissan produced 1.93 million vehicles, up 61.9 percent on year.

Honda Motor Co. reported a 17.7 percent increase in global production, at 303,549 vehicles in June. Honda said Japan sales were up for 12 months straight, and exports also recovered.

Honda produced 1.80 million vehicles around the world during the first half, up 36.7 percent from the previous year, and hitting records for the company in regional production in Asia and China, it said.

Mazda Motor Corp.'s global production rose 24.6 percent to 115,146 vehicles in June from the previous year, and added 63.9 percent to 627,856 vehicles for the first half.

Mitsubishi Motors Corp. reported a 59.8 percent jump in global production in June to 92,324 vehicles, and first-half production at 506,987 vehicles, up 83.2 percent, with exports booming to China.

U.S. Cube recall
NEW YORK (Kyodo) Nissan Motor Co. is recalling about 46,000 of its Cube compact vehicles sold in the United States on concerns over a possible fuel leakage problem, the National Highway Traffic Safety Administration said.

http://search.japantimes.co.jp/cgi-bin/nb20100728a1.html

August - Rising Yen concerns Japan

The government and the Bank of Japan are facing increasing pressure to take concrete steps to stop the yen appreciating after the dollar plunged to its lowest level in 15 years against the Japanese currency in the London market Wednesday.

At the London exchange market, the dollar dived below 85 yen, to 84.72 yen, at one point Wednesday. The yen briefly appreciated to the 84.90 yen level in Tokyo on Thursday.

In early London trade Thursday, the dollar changed hands for 85.65-75 yen.

Experts are urging the government and the Bank of Japan to intervene in the market to ease the situation by selling yen and buying dollars, stimulating the economy with pump-priming measures and further financial easing. If the situation is not remedied, it could impact the Japanese economy significantly. For example, business results of export-oriented companies likely will be seriously affected.

However, it might be difficult for the government and central bank to win understanding for such actions from North American and major European countries.

Effects of lone action limited

The immediate focus is on whether the government and the Bank of Japan will intervene in the yen-dollar exchange market. However, as market intervention by Japan alone can produce only limited effects, the government might ask authorities in the United States and major European countries to jointly intervene in the currency markets.

Yet when taking other countries' circumstances into account, weaker currencies against the yen lend themselves to export-led economic recovery.

After the so-called Lehman shock in 2008, U.S. President Barack Obama announced in his State of the Union address in January 2010 plans to double U.S. exports. Many eurozone countries, including Germany, have accepted a weaker euro against the yen.

It is difficult for such countries to see the benefit of cooperating with Japan to ease the strong yen.

Furthermore, European authorities would not welcome intervention by Japan to curb the yen's appreciation, and joint intervention by major central banks is not on the cards, Reuters quoted an anonymous eurozone official as saying Wednesday.

Yet, some government heavyweights have tried to improve the situation with "verbal interventions."

For instance, Finance Minister Yoshihiko Noda said recent exchange rate moves have been "one-sided," reiterating his view that volatile fluctuations are undesirable.

"I think the recent moves have been somewhat one-sided," Noda said at a press conference Tuesday. "Volatile or excessive moves in foreign exchange rates will negatively impact the stability of the economy and financial markets and are undesirable."

However, his remarks have had no effect on the market so far.

According to Nomura Securities' Financial and Economic Research Center, if the yen hovers around the 83 yen-per-dollar level, the real growth rate in gross domestic product for fiscal 2010 will be depressed by slightly more than 0.3 percentage point a year. If it hovers at 80 yen against the dollar, the growth rate will be set back 0.6 percentage point.

"If the government doesn't take any action, the aggravation of already dampened business sentiment will intensify,--Esaid Masamichi Adachi, senior economist at JP Morgan Securities Japan Co.

Economic stimulation possible?

Economy, Trade and Industry Minister Masayuki Naoshima said Wednesday that the government must discuss what measures it can take to stimulate the economy, especially to create jobs.

Naoshima spoke at a press conference in which he announced the ministry would conduct an emergency survey of about 200 export-oriented companies on the effects of the yen's current appreciation.

With its analysis of the survey results, which will be released late this month, the government plans to move into full gear its formulation of additional pump-priming measures.

However, the yen's appreciation continuously advanced in late June, moving from the \90 range to the \80 range, and has further appreciated beyond the forecasts of major export-oriented companies.

During this period, business leaders repeatedly have voiced concerns over the yen's appreciation. Despite the situation, the administration of Prime Minister Naoto Kan virtually has put economic stimulus measures on the back burner as it has been preoccupied with the House of Councillors election and subsequent political affairs.

Under the situation of the divided Diet, expectations the government would take rapid and flexible economic measures have been rendered nearly hopeless.

Market players now increasingly hope the Bank of Japan will take further financial easing measures, such as adding to the current \20 trillion fund for a new type of open market operation or by reintroducing the zero-interest rate policy.

However, the central bank decided not to take further easing measures at its Policy Board meeting Monday and Tuesday.

Gov. Masaaki Shirakawa said at a press conference Tuesday that the Japanese economy would follow a path to recovery in line with the central bank's assumptions.

Thus, the central bank is not that different from the government, in that flexibly responding to the current situation is extremely unlikely.

http://www.yomiuri.co.jp/dy/business/T100812004978.htm

Fukui - Report - Gov Matchmaking Service

The coastal region of Fukui has Japan’s biggest share of dual-income households, the highest ratio of working women and the lowest unemployment rate. What it doesn’t have is enough babies.

The provincial government this month is starting the Fukui Marriage-Hunting Cafe, a Web site for singles, to help stem the falling birthrate as it begins to damage the economy. As an added incentive, couples who agree to marry will get cash or gifts, said Akemi Iwakabe, deputy director of Fukui’s Children and Families division.

“Many of our single residents were telling us that they wanted to get married, but couldn’t because they weren’t meeting anyone,” she said.

Japan’s first online dating service organized by a prefectural government follows national measures to extend parental leave that have so far failed to convince women to have more children. The fertility rate has dropped to 1.34 children per woman, shrinking the pool of workers and consumers and increasing the burden on younger employees to pay for an aging population.

“It’s difficult to breathe life back into an economy without children, without young people,” said Naoki Iizuka, an economist at Mizuho Securities Co in Tokyo. “When an area like this keeps aging, the public finances of that government won’t last.”

Fukui, 316km northwest of Tokyo, is known for its spectacle frames, synthetic fiber and nuclear power plants that generate a quarter of Japan’s atomic energy. It also produces about twice the number of business owners as a proportion to the number of residents compared with the national average.

The OECD estimates the number of working-age Japanese will drop to 81 million this year, compared with the 1995 peak of 87 million. The average number of children that Japanese women have compares with Canada’s 1.6 and France’s 2, according to the World Bank. The 2.1 rate in the US is considered the minimum for a developed nation to maintain a constant population.

Japan’s leaders must take more aggressive measures to help young people raise families, or the baby shortage will accelerate, Iizuka said. About 23 percent of the country’s population is over 65, the highest ratio among the 62 countries tracked by Bloomberg.

Key to boosting the birthrate is getting couples to marry. Three-fourths of the decline in Japan’s fertility rate between 1975 and 2005 can be explained by more women delaying or foregoing marriage, says Miho Iwasawa, a researcher at the National Institute of Population and Social Security Research in Tokyo. Only 2 percent of children are born out of wedlock in Japan, according to the Labor Ministry.

Census data show that 32 percent of women between 30 to 34 years old were unwed in 2005, more than twice the number 15 years earlier.

The Democratic Party of Japan came to power last year promising to lighten the burden of child-rearing. Families started receiving monthly allowances of ￥13,000 (US$150) a child this fiscal year and can now send their children to public high school for free. Japanese Prime Minister Naoto Kan appointed Koichiro Gemba to a Cabinet-level post to counter the declining birthrate. Kan had also pushed his staff to leave work at 6pm for weekday dates.

Even so, national and local governments need to reach the unmarried, whose rising proportion in the country is the biggest factor behind the shortage of children, said Shigeki Matsuda, a sociologist at Dai-Ichi Life Research Institute in Tokyo.

Japan isn’t the only country experimenting with publicly run matchmaking.

Singapore’s Social Development Network works to “facilitate marriages and nurture a culture where singles view marriage as a top life goal.” Its “LoveByte” Web site dispenses dating advice, allows people to search for other registered singles and advertises privately run speed-dating events.

Japan’s previous local government efforts to pair youth haven’t raised marriage rates, Dai-Ichi’s Matsuda said.

“The root problem is this: They don’t have financial stability,” he said. “That’s a problem with their employment opportunities that can’t be resolved by dating support.”

Fukui’s service will also compete with a host of private online dating services such as Tokyo-based O-Net Inc, which organizes events for its 38,000 members such as wine-tasting tours and “elegance” seminars for women.

Organized dating activities called konkatsu, or marriage-hunting, including 8am singles breakfasts, trash-picking by Shinjuku station in Tokyo, and Sunday morning book clubs, are also becoming popular.

Fukui had the lowest jobless rate in the first quarter among Japan’s 47 prefectures, at 3.3 percent, according to the statistics bureau. About 53 percent of Fukui’s women held jobs in 2007, versus a national average of 48.8 percent. The prefecture also had the highest ratio of dual-income households at 39.6 percent, against Japan’s average of 26.6 percent, census data from 2005 show.

The hope is that members from the Fukui Marriage-Hunting Cafe will pair off and help turn around the prefecture’s fertility rate, which dropped to 1.54 in 2008, from 1.93 in 1985.

“Our goal is to first help people meet each other and then support them as they get married and raise children,” Iwakabe said. “It’s all part of a larger plan to aid parents in the process of child-rearing.”

http://www.taipeitimes.com/News/bizfocus/archives/2010/08/08/2003479824

July - Tokyo Office Vacancy Rate - first fall in 30 months

The average office vacancy rate in five central wards of Tokyo at the end of July fell by 0.04 percentage point from a month earlier to 9.10 percent, the first fall in 30 months, office broker Miki Shoji Co. said Thursday.

The fall in Chiyoda, Chuo, Minato, Shinjuku and Shibuya wards came as office supply declined amid widespread concern over the future course of the economy, Miki Shoji said.

But some companies want to expand their offices, it said.

The average business district office vacancy rate rose by 0.01 percentage point to 11.80 percent in Osaka and dropped by 0.05 point to 13.30 percent in Nagoya.

http://www.breitbart.com/article.php?id=D9HD4SG00&show_article=1

July - Tokyo Office Vacancy Rate - first fall in 30 months

August - 10yr JGB's Sink below 1% - 7 year low

The yield on the benchmark 10-year Japanese government bond closed below the 1 percent threshold Wednesday as concern over the global economic slowdown grows both at home and abroad, prompting investors to seek safety in government bonds.

The yield on the No. 309, 1.1 percent issue, a key indicator of long-term interest rates, ended the day at 0.995 percent, down 0.04 percentage point from Tuesday's close and falling below the 1 percent mark for the first time since August 2003.

Long-term interest rates have been on the decline since May. This is due to continued capital flight from high-risk assets such as stocks triggered by the debt crisis in Europe, such as the problems seen in Greece.

Since July, concern over the U.S. economic slowdown has grown. U.S. Federal Reserve Board Chairman Ben Bernanke told Congress last month that the economic outlook is "unusually uncertain." The U.S. gross domestic product in the April-June quarter grew at a 2.4 percent annual rate, a marked decline from the 3.7 percent growth posted in the January-March quarter, according to the U.S. Commerce Department.

Global investment capital has increasingly been flowing to low-risk assets. The yield on the benchmark 10-year U.S. government bond has been closing below 3 percent recently. It closed at 2.91 percent per annum Tuesday, 0.05 percentage point lower than Monday's finish.

In Japan, lending by financial institutions has been sluggish, prodding them to increase holdings of safe-haven bonds, which pushes down long-term interest rates. It is possible long-term interest rates will fall further. Akitsugu Bando, senior economist at Okasan Securities Co., said rates may fall as low as 0.95 percent.

Meanwhile, an official at a leading securities company said there was also a possibility that government bonds would be sold off if pessimism over the economic outlook eased.

Deflation worry in the West

However, concern over deflation has arisen even in the United States and Europe. "All of the major economies are about to enter a low-growth period," a market official said

Since the collapse of Lehman Brothers in 2008, private households and businesses have been saddled with massive debts, making it difficult for new demand to be generated. The same official said other major economies might fall into a protracted period of economic stagnation, similar to what Japan has been experiencing.

Concern over economic slowdown is also rising domestically. Koichi Haji, head of the economic research division at NLI Research Institute, said, "The appearance of bright economic prospects is more important than declines in interest rates."

Declines in long-term interest rates will lead to lower interest rates on housing loans for individuals and on loans to businesses. However, such declines may not immediately lead to a rise in demand for funds by businesses, causing only a limited stimulatory effect on the greater economy.

http://www.yomiuri.co.jp/dy/business/T100804005318.htm

June - Unemployment Rises, Industrial Output Falls

Japan's unemployment rate ticked higher while production of automobiles and electronic gadgets saw a surprise slip in June, data showed Friday, in signs that an export-driven recovery may be stalling.

The data poses a challenge for Prime Minister Naoto Kan's government, which must balance Japan's uncertain economic reality with an agenda that has placed cutting the industrialised world's biggest public debt at its core.

Shipments of cars, gadgets and components have been crucial in offsetting a weaker demand picture back home, but concern is mounting that Beijing's efforts to cool China's economy and doubts over eurozone and US demand may hit Japan.

The planned expiry of government incentives to purchase cars may also weigh on production for the domestic market as the overseas climate worsens, analysts say. Incentives to buy energy-efficient vehicles are due to end in September.

"Clearly, the recovery has slowed down, particularly since the January-March quarter," said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo.

"We are seeing exports gradually become more sluggish, made worse by the receding effects of stimulus programmes."

Unemployment rose to 5.3 percent in June, the highest level since November and missing market expectations of 5.1 percent, in an illustration of the headwinds faced by the world's second-largest economy.

And industrial output surprised the market by falling 1.5 percent in June from the previous month, missing expectations of a 0.l percent rise.

"With production turning softer, the general recovery will possibly weaken toward the end of the year," said Yasuo Yamamoto, senior economist at Mizuho Research Institute.

Some of Japan's biggest companies recently posted strong quarterly profits as demand picks up from the lows hit during the financial crisis, but economic uncertainty has led to a strong yen, threatening future earnings, analysts say.

"A strong yen could pressure exports in the future," said Shinke. "And if slowdown worries over the US economy increase, this may lead to slowdown of exports, which would weigh on production."

Sony on Thursday lifted its annual profit outlook by 20 percent to 60 billion yen but warned of possible risks in the future posed by the yen's strength, forcing the electronics giant to reevaluate its currency forecasts.

But Nintendo fell into the red with a net loss of 25.2 billion yen, as a strong Japanese currency hurt its overseas operations. Sales outside Japan make up 87 percent of its total.

However, other data showed some glimpses of sunlight for the economy which, despite remaining mired in deflation, saw the rate of decline in consumer prices ease for the second month in a row.

Japan's core consumer price index fell 1.0 percent in June from a year earlier, marking the 16th straight month of decline as deflation continues to drag on recovery, with lower prices biting into corporate profits.

But the drop in core prices, which exclude volatile fresh food prices, was slightly smaller than market expectations of a 1.1 percent decline.

The core CPI figure slid 1.2 percent in May and 1.5 percent in April.

And core CPI in the Tokyo area in July -- considered to be a leading indicator of nationwide price trends -- fell 1.3 percent on-year, suggesting that the rate of decline nationwide may pick up in the next few months.

But in a sign domestic demand may be rising, average household spending in June was 0.5 percent higher on-year and 2.9 percent higher than in May.

http://au.biz.yahoo.com/100730/33/2ep2n.html

Q3 - Economic Growth Stalls

Japan's economy grew at the slowest pace in three quarters during April-June, data showed, as cooling exports and falling consumption pointed to a recovery that was losing steam.

Real gross domestic product increased by an annualised 0.4 per cent in the quarter, sharply missing forecasts from economists polled by Dow Jones Newswires of 2.3 per cent annualised growth.

On a quarterly basis, growth was at 0.1 per cent, down from a revised 1.1 per cent in the previous quarter.

The Nikkei 225 index was 1.48 per cent lower following the release of the data.

The figures pose a challenge for Prime Minister Naoto Kan's government, which must balance an uncertain economic reality with an agenda dominated by the need to cut the industrialised world's biggest public debt.

In June, Japan's unemployment rate edged higher to 5.3 per cent, while production of automobiles and electronic gadgets underwent a surprise slip, amid signs that an export-driven recovery may be stalling.

Shipments of cars, gadgets and components have been crucial in off-setting weaker demand at home, but concern is mounting that Japan may be hit by Beijing's efforts to cool China's economy, together with fragile eurozone and US demand.

Deflation and weak domestic demand have long burdened Japan, as consumers tend to put off purchases in the hope of further price falls.

The planned expiry of government incentives to purchase cars in September may also weigh on production for the domestic market just as the overseas climate worsens, analysts say,

Another threat to Japan's exporters is a slowdown overseas, particularly in the United States.

US economic growth slowed dramatically in the second quarter, down sharply to 2.4 per cent from 3.7 per cent in the first quarter.

Such slowing global expansion is cooling an export sector that is also anxious about the strength of the yen, which recently touched a 15-year high against the dollar.

For every one-yen rise in the currency's value against the dollar, companies can lose tens of billions of yen earned overseas when repatriated, threatening a core part of Japan's economy.

http://www.smh.com.au/business/world-business/japan-growth-slows-as-recovery-loses-steam-20100816-125we.html