TOKYO — Japanese exports grew at their slowest pace this year in August as the impact of a strong yen and softening overseas demand illustrated the risks threatening a fragile recovery.
Strong Asian demand for cars, high-tech products and factory parts have in recent months helped offset a weak domestic picture and enabled Japan's biggest companies to return to profit and bring about a tentative economic recovery.
But analysts expect exports to decelerate further in the months ahead on slowing demand, the rise of the yen and also on the potential impact of frayed relations with key trade partner China over a territorial dispute.
While demand for steel and automobile-related products saw Japan's exports jump 15.8 percent to 5.22 trillion yen year-on-year in August, this was below July's 23.5 percent rise and the slowest pace since December 2009.
The August export figure also missed forecasts of a 17.9 percent rise.
"The idea of a V-shaped recovery based solely on the export sector is no longer a credible scenario," said Japan Research Institute chief economist Hidehiko Fujii.
"The outlook for the Japanese economy is severe," he told Dow Jones Newswires.
Japan's trade surplus shrank for the first time in 15 months in August from year-earlier levels, down 37.5 percent to 103.2 billion yen (1.22 billion dollars), according to the finance ministry.
Increased imports of crude oil, liquefied natural gas as well as iron ore lowered the overall surplus despite the rise in exports.
Analysts warn that risks to demand remain as world leaders embrace tighter fiscal policies to help rebalance a global economy knocked off its axis by the financial crisis.
"The drop in the trade surplus is a sign that the world economy itself is slowing down," said Yuji Shimanaka, chief economist at Mitsubishi UFJ Morgan Stanley Securities.
"Exporters expect overseas demand to weaken sooner or later while they are also threatened by the rapid rise of the yen," he said.
A strong yen not only makes exports more expensive but also erodes companies' overseas profits when repatriated.
Japan stepped into the currency markets in September for the first time since 2004 in a bid to stem the yen's strength after it hit a 15-year high against the dollar, and has repeatedly warned it is ready to do so again.
Meanwhile Japan's trade deficit with China shrank 47.3 percent to 69.6 billion yen in August compared with a year ago.
Exports to China, a major driver of the Japanese economy, rose 18.5 percent to 1.05 trillion yen, while imports from China increased 20.0 percent to 1.12 trillion yen.
But Shimanaka said he expected Japan's trade surplus to slump further in the October-December quarter on the impact of September's political tensions with China.
An assertive Beijing still demands an apology and compensation for the detention of a Chinese fisherman after his boat collided with two Japanese Coast Guard vessels, reigniting a territorial dispute in the East China Sea.
Japan-based traders say China has blocked exports of rare earth minerals, essential for Japanese industries manufacturing components used in a variety of sophisticated electronic products including mobile phones and electric cars.
Beijing has also toughened customs clearance procedures, delaying shipment to and from Japan, in what appears to be retaliation over the diplomatic dispute, the The Daily Yomiuri reported Monday.
http://www.google.com/hostednews/afp/article/ALeqM5j6FOlKRRUzjhShSdoi0EwV1eMrMw
Thursday, September 30, 2010
Yakuza Groups Feeling Pressure
News organizations have consistently celebrated the steady rise of the Tokyo Sky Tree in Tokyo's Sumida Ward. Yet the most interesting aspect to the building project, set to reach a height of 634 meters, might be taking place at ground level.
At the base of the steel structure, a signboard, complete with a stick-figure campaign character raising its fists in anger, announces that yakuza criminal gangs are prohibited from participating in the project, which is scheduled to be completed in 2012.
In November 2008, members of construction companies formed a committee designed to exclude gangster groups. A similar arrangement was conceived for the new incarnation of the Kabuki-za theater in Ginza, Chuo Ward, whose historic building closed this year.
"We have formed alliances with construction companies that are designed to shut off yakuza involvement in these projects," says Hiroichi Katayama, superintendent of the Organized Crime Elimination division within the Tokyo Metropolitan Police Department.
Like organized crime in other countries, yakuza gangs have traditionally been tightly intertwined with Japan's construction corporations, but the industry might now be seeing criminal organizations as something other than a necessary evil.
"In the past, gangster groups would use these kinds of projects as an opportunity to raise funds through land deals," explains Katayama, referring to the Tokyo Sky Tree and Kabuki-za sites.
The superintendent is describing jiage, the practice of forcibly removing tenants from existing structures so the site can be cleared and the land sold for development. Other means of gangster involvement include the settlement of land disputes and the recruitment of labor.
"Construction companies require labor forces," says Minoru Yokoyama, professor of law at Kokugakuin University and a vice chair for next year's International Society of Criminology conference in Kobe. "Subcontractors on projects will often broker deals with mediators, which will be gangster groups."
Yet the industry, racked by a declining domestic market over the past two decades, may have had enough of dealing with so-called ninkyo dantai, or chivalrous organizations, as yakuza gangs anointed themselves around the end of World War II.
"From an economic point of view, the costs are more," says Yokoyama. "Then, the money obtained by yakuza gangs from these projects is funneled through underground networks and winds up being used to purchase things like drugs, which are then sold for a profit."
Yokoyama adds that the government has been aware of recent complaints by citizens regarding such gangster activities and increasingly carrying out policies to thwart their activities.
In 2008, Yokohama-based real estate company Suruga Corporation utilized a front company of the Yamaguchi-gumi, Japan's largest gang, to — in true jiage fashion — evict occupants of a building in Tokyo's Chiyoda Ward purchased three years before. Members of the front company were taken into custody. That same year, a 47-year-old upper-level boss of Japan's second-largest gang, the Sumiyoshi-kai, was arrested for allegedly attempting to extort cash from the seven-company joint venture that completed construction of the Gran Tokyo North Tower at Tokyo Station in 2007. The contractors for the tower had formed a similar alliance to that now ongoing with the Tokyo Sky Tree and Kabuki-za projects.
This year, the resistance has been met with conflict. In April, three shots were fired into the house of the parents of an employee at energy contractor Saibu Gas in Fukuoka City. Soon after, five more rounds were fired at the entrance of a firm affiliated with the contractor. It was widely reported that the firm had not succumbed to payment demands from the Kyushu-based Kudo-kai syndicate regarding the construction of a liquefied natural gas platform in Kitakyushu.
In a bold move, a nonpayment regulation was enacted in April in Fukuoka Prefecture, the first of its kind in Japan. Citizens and companies, according to the legislation, are now held liable for contributions made to gangster activities. Penalties include a fine of up to ¥500,000 or one year in jail.
The National Police Agency has indicated that cutting off funds to gangs is the best way to eliminate their influence. The agency has said that it would like other municipalities to institute similar measures.
The elimination of gangster groups from construction jobs, however, will be challenging given the long legacy. Gangster ties with construction are widely considered to date back to the third-generation boss of the Yamaguchi-gumi, which boasts an estimated membership of 40,000. Appointed in 1941, Kazuo Taoka began to control construction and dockside labor in the gang's base of Kobe and initiated expansion nationwide as Japan rebuilt itself following the devastation of World War II.
"Right now, gangster activities are stable," says Yokoyama. "They maintain their traditional ways. It will be very difficult to eradicate all activities immediately. It takes time."
http://search.japantimes.co.jp/cgi-bin/fd20100926a1.html
At the base of the steel structure, a signboard, complete with a stick-figure campaign character raising its fists in anger, announces that yakuza criminal gangs are prohibited from participating in the project, which is scheduled to be completed in 2012.
In November 2008, members of construction companies formed a committee designed to exclude gangster groups. A similar arrangement was conceived for the new incarnation of the Kabuki-za theater in Ginza, Chuo Ward, whose historic building closed this year.
"We have formed alliances with construction companies that are designed to shut off yakuza involvement in these projects," says Hiroichi Katayama, superintendent of the Organized Crime Elimination division within the Tokyo Metropolitan Police Department.
Like organized crime in other countries, yakuza gangs have traditionally been tightly intertwined with Japan's construction corporations, but the industry might now be seeing criminal organizations as something other than a necessary evil.
"In the past, gangster groups would use these kinds of projects as an opportunity to raise funds through land deals," explains Katayama, referring to the Tokyo Sky Tree and Kabuki-za sites.
The superintendent is describing jiage, the practice of forcibly removing tenants from existing structures so the site can be cleared and the land sold for development. Other means of gangster involvement include the settlement of land disputes and the recruitment of labor.
"Construction companies require labor forces," says Minoru Yokoyama, professor of law at Kokugakuin University and a vice chair for next year's International Society of Criminology conference in Kobe. "Subcontractors on projects will often broker deals with mediators, which will be gangster groups."
Yet the industry, racked by a declining domestic market over the past two decades, may have had enough of dealing with so-called ninkyo dantai, or chivalrous organizations, as yakuza gangs anointed themselves around the end of World War II.
"From an economic point of view, the costs are more," says Yokoyama. "Then, the money obtained by yakuza gangs from these projects is funneled through underground networks and winds up being used to purchase things like drugs, which are then sold for a profit."
Yokoyama adds that the government has been aware of recent complaints by citizens regarding such gangster activities and increasingly carrying out policies to thwart their activities.
In 2008, Yokohama-based real estate company Suruga Corporation utilized a front company of the Yamaguchi-gumi, Japan's largest gang, to — in true jiage fashion — evict occupants of a building in Tokyo's Chiyoda Ward purchased three years before. Members of the front company were taken into custody. That same year, a 47-year-old upper-level boss of Japan's second-largest gang, the Sumiyoshi-kai, was arrested for allegedly attempting to extort cash from the seven-company joint venture that completed construction of the Gran Tokyo North Tower at Tokyo Station in 2007. The contractors for the tower had formed a similar alliance to that now ongoing with the Tokyo Sky Tree and Kabuki-za projects.
This year, the resistance has been met with conflict. In April, three shots were fired into the house of the parents of an employee at energy contractor Saibu Gas in Fukuoka City. Soon after, five more rounds were fired at the entrance of a firm affiliated with the contractor. It was widely reported that the firm had not succumbed to payment demands from the Kyushu-based Kudo-kai syndicate regarding the construction of a liquefied natural gas platform in Kitakyushu.
In a bold move, a nonpayment regulation was enacted in April in Fukuoka Prefecture, the first of its kind in Japan. Citizens and companies, according to the legislation, are now held liable for contributions made to gangster activities. Penalties include a fine of up to ¥500,000 or one year in jail.
The National Police Agency has indicated that cutting off funds to gangs is the best way to eliminate their influence. The agency has said that it would like other municipalities to institute similar measures.
The elimination of gangster groups from construction jobs, however, will be challenging given the long legacy. Gangster ties with construction are widely considered to date back to the third-generation boss of the Yamaguchi-gumi, which boasts an estimated membership of 40,000. Appointed in 1941, Kazuo Taoka began to control construction and dockside labor in the gang's base of Kobe and initiated expansion nationwide as Japan rebuilt itself following the devastation of World War II.
"Right now, gangster activities are stable," says Yokoyama. "They maintain their traditional ways. It will be very difficult to eradicate all activities immediately. It takes time."
http://search.japantimes.co.jp/cgi-bin/fd20100926a1.html
Love Hotel Fund Freezes Redemptions
The Nikkei reports today that Global Financial Support stopped the refund of principal of "HOPE series"of investment products which invested into love hotels. The products promised a yield of 8.4% yield per year to retail investors with a minimum investment of ￥500,000. However, they have run out of money and have stopped redemptions by investors.
Investors have retained lawyers to sue the manager (GFS).
GFS issued various funds known as the "HOPE series" of which there were 10 separate funds each investing into single love hotels. They started operating from Oct/2006, and "HOPE last", which started operating Sep/2007. In term of "HOPE alfa 7~10" of currently in operation, GFS announced to stop the refund of principal at 14th Sep. In term of "HOPE last" of finishing operation, GFS announced that amount of redemption remained about ￥80,000 per principal ￥500,000.
According to lawyers, GFS traded hotel asset between each funds, and postpone loss of hotels to successor fund. Moreover, lawyers pointed out that their inappropriate operation to "the breach of trust and dishonest asset management"
Not only GFS did not sufficiently explain a sales of property to investors, but GFS assigned investors capital into a subordinated equity, which should be provided by GFS. Moreover, if introduced new investors to them, GFS paid an incentive (2.5%~5% of principal) to introducer
Asset and property of GFS is already a subject to seizure. Also , GFS could not make a payment a rental fee of their office.
http://kenplatz.nikkeibp.co.jp/article/nfm/news/20100929/543553/
This fund was covered in this article
http://www.tokyoreporter.com/2009/12/01/funds-investing-in-love-hotels-rise-to-the-occasion/
Web Site for GFS -
http://www.hotel-fund.com/
GFS investor news/updates -
http://www.hotel-fund.com/investor/
Class Action Law Suit website -
http://gfshope-bengodan.com/index.html
Investors have retained lawyers to sue the manager (GFS).
GFS issued various funds known as the "HOPE series" of which there were 10 separate funds each investing into single love hotels. They started operating from Oct/2006, and "HOPE last", which started operating Sep/2007. In term of "HOPE alfa 7~10" of currently in operation, GFS announced to stop the refund of principal at 14th Sep. In term of "HOPE last" of finishing operation, GFS announced that amount of redemption remained about ￥80,000 per principal ￥500,000.
According to lawyers, GFS traded hotel asset between each funds, and postpone loss of hotels to successor fund. Moreover, lawyers pointed out that their inappropriate operation to "the breach of trust and dishonest asset management"
Not only GFS did not sufficiently explain a sales of property to investors, but GFS assigned investors capital into a subordinated equity, which should be provided by GFS. Moreover, if introduced new investors to them, GFS paid an incentive (2.5%~5% of principal) to introducer
Asset and property of GFS is already a subject to seizure. Also , GFS could not make a payment a rental fee of their office.
http://kenplatz.nikkeibp.co.jp/article/nfm/news/20100929/543553/
This fund was covered in this article
http://www.tokyoreporter.com/2009/12/01/funds-investing-in-love-hotels-rise-to-the-occasion/
Web Site for GFS -
http://www.hotel-fund.com/
GFS investor news/updates -
http://www.hotel-fund.com/investor/
Class Action Law Suit website -
http://gfshope-bengodan.com/index.html
Tuesday, September 21, 2010
Residential land prices down for 19th straight year in Japan
OKYO, Sept. 21 (AP) - (Kyodo)—Japan's average residential land price fell 3.4 percent in the year to July 1, marking the 19th straight year of decline, although the drop was less than the 4.0 percent fall recorded for the previous year, the government said Tuesday.
The nation's average commercial land price also decreased 4.6 percent, the third consecutive annual drop, compared with the previous year's 5.9 percent fall in the wake of the 2008 global financial crisis.
Of the 21,786 locations subjected to the annual land price survey this year and last year, 98.5 percent registered decreases, down only 0.3 percentage point from the previous year.
Just 27 locations registered increased land prices, the second lowest, after last year's three, since the government initiated the survey in 1975.
In the three metropolitan regions of Tokyo, Osaka and Nagoya, price drops halved as transactions in condominiums expanded with investment in rental offices recovering.
"Signs of an end to land price falls were seen in the three metropolitan regions," said an official at the Ministry of Land, Infrastructure, Transport and Tourism.
In the Tokyo region, average residential land prices fell 3.0 percent, compared with 4.1 percent for commercial sites.
In the Nagoya region, price drops were limited to 1.3 percent for residential land and 2.9 percent for commercial land.
The Osaka region saw a 3.6 percent fall in the average residential land price and a 5.3 percent decline in the commercial one.
For the other regions, the average residential land price decreased 3.6 percent and the average commercial land price fell 4.8 percent.
All of Japan's 47 prefectures saw land price falls for the second straight year.
The rate of decline in land prices slowed in 18 prefectures, including those in the metropolitan regions, while price drops accelerated in 24 others.
Among commercial points covered by the land price survey, a location in Tokyo's Ginza shopping district recorded the highest price of 20.2 million yen per square meter. The highest residential land price was 2.83 million yen per square meter in Gobancho of Tokyo's Chiyoda Ward.
http://www.breitbart.com/article.php?id=D9IC6ESO0&show_article=1
The nation's average commercial land price also decreased 4.6 percent, the third consecutive annual drop, compared with the previous year's 5.9 percent fall in the wake of the 2008 global financial crisis.
Of the 21,786 locations subjected to the annual land price survey this year and last year, 98.5 percent registered decreases, down only 0.3 percentage point from the previous year.
Just 27 locations registered increased land prices, the second lowest, after last year's three, since the government initiated the survey in 1975.
In the three metropolitan regions of Tokyo, Osaka and Nagoya, price drops halved as transactions in condominiums expanded with investment in rental offices recovering.
"Signs of an end to land price falls were seen in the three metropolitan regions," said an official at the Ministry of Land, Infrastructure, Transport and Tourism.
In the Tokyo region, average residential land prices fell 3.0 percent, compared with 4.1 percent for commercial sites.
In the Nagoya region, price drops were limited to 1.3 percent for residential land and 2.9 percent for commercial land.
The Osaka region saw a 3.6 percent fall in the average residential land price and a 5.3 percent decline in the commercial one.
For the other regions, the average residential land price decreased 3.6 percent and the average commercial land price fell 4.8 percent.
All of Japan's 47 prefectures saw land price falls for the second straight year.
The rate of decline in land prices slowed in 18 prefectures, including those in the metropolitan regions, while price drops accelerated in 24 others.
Among commercial points covered by the land price survey, a location in Tokyo's Ginza shopping district recorded the highest price of 20.2 million yen per square meter. The highest residential land price was 2.83 million yen per square meter in Gobancho of Tokyo's Chiyoda Ward.
http://www.breitbart.com/article.php?id=D9IC6ESO0&show_article=1
Monday, September 20, 2010
Real Estate Caprate Contraction Attracting Foreign Investors
International real estate portfolio investors from the United States to Singapore are increasingly looking to buy property in Japan with over $2 billion in deals already agreed this year, it is claimed...
Tokyo is proving particularly popular with apartments among the best selling classes of real estate at present, according to experts. But other sectors are also seeing increased sales.
‘Hotels, Tokyo offices, Tokyo residential, I would say, will be the three specific sectors and opportunities that are being most sought after by international investors,' said Alistair Meadows, Asia Pacific director for International Capital Group at global property services firm Jones Lang LaSalle.
Buyers who have already declared their interest include Mapletree Investments, the real estate arm of Singapore's state investor Temasek Holdings, with close to $1 billion in new cash earmarked for office buildings, data centres and research and development facilities.
Also looking are American private equity firms Blackstone Group and Fortress, Germany's Deutsche Bank and US based Jones Lang LaSalle's funds arm LaSalle Investment.
Franklin Templeton is understood to be looking to buy a portfolio of distressed loans at a discount, which would provide attractive returns and allow access to physical assets, while Blackstone plans to buy Morgan Stanley's loans which are backed by commercial real estate such as office buildings.
Wealthy Chinese investors are also increasingly looking to Japan and a number of travel agencies have started offering Buy Japanese Property tours. Realtors say major foreign private equity groups, real estate trusts and realtors have earmarked an estimated $6.6 billion for investments in Asia, showing interest in Japan's bricks and mortar assets and property debt.
‘While we are cautious around the country's fundamentals, we do believe that the sheer size of the market allows for opportunities,' said Peter Kim, managing director, ING Real
Estate Investment Management, which has funds invested in Japan.
A bottoming out of real estate prices and a recovery in the debt market are some positives investors are buying into. In a clear indication that office buildings values are set to grow, cap rates, the income that the property will generate divided by its value, have stopped rising.
‘We reiterate our view that cap rates will decline in the second half of 2010 and that real estate prices are very likely to rebound,' Barclays Capital said in a recent report note.
Distressed or marked down properties in Japan, such as debt backed by commercial real estate, are also emerging on the radars of foreign buyers. ‘We are finding a degree of success in finding deals through trust banks or lenders who have taken control of over leveraged assets,' said Jacques Gordon, global investment strategist at LaSalle Investment Management.
As foreign money pours in, the real surge in buying may just be starting, according to Mark Brown, a real estate analyst at researcher Japaninvest. The gap between what distressed property owners are asking and the amount buyers are willing to pay is closing fast, he said, adding that would lead to plenty of new deals.
http://www.themovechannel.com/news/c665d28f-067e/
Tokyo is proving particularly popular with apartments among the best selling classes of real estate at present, according to experts. But other sectors are also seeing increased sales.
‘Hotels, Tokyo offices, Tokyo residential, I would say, will be the three specific sectors and opportunities that are being most sought after by international investors,' said Alistair Meadows, Asia Pacific director for International Capital Group at global property services firm Jones Lang LaSalle.
Buyers who have already declared their interest include Mapletree Investments, the real estate arm of Singapore's state investor Temasek Holdings, with close to $1 billion in new cash earmarked for office buildings, data centres and research and development facilities.
Also looking are American private equity firms Blackstone Group and Fortress, Germany's Deutsche Bank and US based Jones Lang LaSalle's funds arm LaSalle Investment.
Franklin Templeton is understood to be looking to buy a portfolio of distressed loans at a discount, which would provide attractive returns and allow access to physical assets, while Blackstone plans to buy Morgan Stanley's loans which are backed by commercial real estate such as office buildings.
Wealthy Chinese investors are also increasingly looking to Japan and a number of travel agencies have started offering Buy Japanese Property tours. Realtors say major foreign private equity groups, real estate trusts and realtors have earmarked an estimated $6.6 billion for investments in Asia, showing interest in Japan's bricks and mortar assets and property debt.
‘While we are cautious around the country's fundamentals, we do believe that the sheer size of the market allows for opportunities,' said Peter Kim, managing director, ING Real
Estate Investment Management, which has funds invested in Japan.
A bottoming out of real estate prices and a recovery in the debt market are some positives investors are buying into. In a clear indication that office buildings values are set to grow, cap rates, the income that the property will generate divided by its value, have stopped rising.
‘We reiterate our view that cap rates will decline in the second half of 2010 and that real estate prices are very likely to rebound,' Barclays Capital said in a recent report note.
Distressed or marked down properties in Japan, such as debt backed by commercial real estate, are also emerging on the radars of foreign buyers. ‘We are finding a degree of success in finding deals through trust banks or lenders who have taken control of over leveraged assets,' said Jacques Gordon, global investment strategist at LaSalle Investment Management.
As foreign money pours in, the real surge in buying may just be starting, according to Mark Brown, a real estate analyst at researcher Japaninvest. The gap between what distressed property owners are asking and the amount buyers are willing to pay is closing fast, he said, adding that would lead to plenty of new deals.
http://www.themovechannel.com/news/c665d28f-067e/
Friday, September 17, 2010
Cash Is King for Japan Households as Pessimism Threatens Japan's Recovery
Cash is king for Japanese households as pessimism about the economic outlook grows, threatening to undermine investment and the nation’s recovery.
Currency and deposits held by the country’s households last quarter increased to 806.5 trillion yen ($9.39 billion) as of June 30, their highest level since quarterly data began in 1997, the Bank of Japan said in its flow of funds report in Tokyo today. Non-financial companies’ cash holdings were also near record levels, the report showed.
The data suggest that investors’ risk aversion may prevent demand inside Japan from picking up at a time when export growth decelerates in reaction to a strong yen and weaker overseas economies. The currency’s advance to a 15-year high against the dollar prompted Japan to intervene this week in the currency market for the first time in six years.
“The desire for safety is strengthening, as there’s just so much uncertainty in the outlook for the economy,” said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute in Tokyo. “This is one of the reasons stocks keep falling.”
Falling Shares
Total household assets came to 1,445 trillion yen, their lowest level in three quarters, weighed down by a decline in stocks during the period on concern the European debt crisis would cut short the global economic rebound. The Nikkei 225 Stock Average lost more than 15 percent last quarter, and has only climbed 2 percent since then even with corporate profits increasing.
Cash and deposits held by non-financial companies last quarter totaled 200.5 trillion yen, close to the previous period’s 203.9 trillion yen record, according to the report.
Japan’s export-fueled expansion may be losing steam. As export growth slowed to its slowest pace this year of 23.5 percent in July, the overall economy grew at a 1.5 percent annual rate in the second quarter, less than half the pace of the previous period. Households are becoming gloomier, with consumer confidence sliding to a four-month low in August.
At the same time, a recovery in corporate earnings encouraged firms to bolster investment in the second quarter.
In a sign that households and companies may prefer to put money where it can be retrieved right away rather than locked up to earn extra interest, cash parked in low-interest accounts is rising, according to the data.
Transferrable Deposits
Transferrable deposits increased 1.7 percent in the second quarter from a year earlier to the highest level since at least 1997.
“With interest rates falling like this, there’s little merit in putting money in savings accounts, and so people opt for liquidity,” Shinke added. “Obviously deflation plays a big factor in this as well,” because the purchasing power of the yen gains anyway with prices falling, he said.
The yield on Japan’s benchmark 10-year bond was at 1.055 percent as of 10:42 a.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The yield was at 1.32 percent at the start of the year.
http://www.bloomberg.com/news/2010-09-17/cash-is-king-for-japan-households-as-pessimism-threatens-japan-s-recovery.html
Currency and deposits held by the country’s households last quarter increased to 806.5 trillion yen ($9.39 billion) as of June 30, their highest level since quarterly data began in 1997, the Bank of Japan said in its flow of funds report in Tokyo today. Non-financial companies’ cash holdings were also near record levels, the report showed.
The data suggest that investors’ risk aversion may prevent demand inside Japan from picking up at a time when export growth decelerates in reaction to a strong yen and weaker overseas economies. The currency’s advance to a 15-year high against the dollar prompted Japan to intervene this week in the currency market for the first time in six years.
“The desire for safety is strengthening, as there’s just so much uncertainty in the outlook for the economy,” said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute in Tokyo. “This is one of the reasons stocks keep falling.”
Falling Shares
Total household assets came to 1,445 trillion yen, their lowest level in three quarters, weighed down by a decline in stocks during the period on concern the European debt crisis would cut short the global economic rebound. The Nikkei 225 Stock Average lost more than 15 percent last quarter, and has only climbed 2 percent since then even with corporate profits increasing.
Cash and deposits held by non-financial companies last quarter totaled 200.5 trillion yen, close to the previous period’s 203.9 trillion yen record, according to the report.
Japan’s export-fueled expansion may be losing steam. As export growth slowed to its slowest pace this year of 23.5 percent in July, the overall economy grew at a 1.5 percent annual rate in the second quarter, less than half the pace of the previous period. Households are becoming gloomier, with consumer confidence sliding to a four-month low in August.
At the same time, a recovery in corporate earnings encouraged firms to bolster investment in the second quarter.
In a sign that households and companies may prefer to put money where it can be retrieved right away rather than locked up to earn extra interest, cash parked in low-interest accounts is rising, according to the data.
Transferrable Deposits
Transferrable deposits increased 1.7 percent in the second quarter from a year earlier to the highest level since at least 1997.
“With interest rates falling like this, there’s little merit in putting money in savings accounts, and so people opt for liquidity,” Shinke added. “Obviously deflation plays a big factor in this as well,” because the purchasing power of the yen gains anyway with prices falling, he said.
The yield on Japan’s benchmark 10-year bond was at 1.055 percent as of 10:42 a.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The yield was at 1.32 percent at the start of the year.
http://www.bloomberg.com/news/2010-09-17/cash-is-king-for-japan-households-as-pessimism-threatens-japan-s-recovery.html
Wednesday, September 15, 2010
August - McDonalds has best month ever
McDonald's Holdings Co. (Japan) Ltd. said Tuesday that sales in August hit the highest level for a single month since the company's founding in 1971, rising 5 percent from a year earlier to 51.39 billion yen.
The introduction of new chicken dishes in July and a discount on Big Mac hamburgers as well as brisk sales of iced coffee and other drinks amid the scorching summer heat helped boost overall sales, the fast food chain operator said.
The company reported its previous record monthly sales in March, or 49.73 billion yen, when it sold large hamburgers called the California Burger and the Texas Burger for a limited period
http://www.breitbart.com/article.php?id=D9I316200&show_article=1
The introduction of new chicken dishes in July and a discount on Big Mac hamburgers as well as brisk sales of iced coffee and other drinks amid the scorching summer heat helped boost overall sales, the fast food chain operator said.
The company reported its previous record monthly sales in March, or 49.73 billion yen, when it sold large hamburgers called the California Burger and the Texas Burger for a limited period
http://www.breitbart.com/article.php?id=D9I316200&show_article=1
October - Average hourly minimum wage to rise 17 yen to 730 yen
The nation's weighted-average hourly minimum wage will rise by 17 yen from the previous year to 730 yen in the current fiscal year that started in April, the largest increase since fiscal 2002 when such wages were first calculated by the hour, the labor ministry said Friday.
The Central Minimum Wages Council, a Health, Labor and Welfare Ministry advisory panel, recommended last month that the hourly wage be raised by between 10 and 30 yen. Local panels in 42 of the 47 prefectures in the country have since added between 1 and 6 yen to the council's recommendations for their prefectures.
The minimum wage will be revised beginning in early October.
The lowest hourly minimum wage in the country will be 642 yen. Tottori, Shimane, Kochi and Kagoshima prefectures will join Saga, Nagasaki, Miyazaki and Okinawa, where the lowest-level minimum wages have prevailed since the revisions in fiscal 2009.
http://www.breitbart.com/article.php?id=D9I50C7O0&show_article=1
The Central Minimum Wages Council, a Health, Labor and Welfare Ministry advisory panel, recommended last month that the hourly wage be raised by between 10 and 30 yen. Local panels in 42 of the 47 prefectures in the country have since added between 1 and 6 yen to the council's recommendations for their prefectures.
The minimum wage will be revised beginning in early October.
The lowest hourly minimum wage in the country will be 642 yen. Tottori, Shimane, Kochi and Kagoshima prefectures will join Saga, Nagasaki, Miyazaki and Okinawa, where the lowest-level minimum wages have prevailed since the revisions in fiscal 2009.
http://www.breitbart.com/article.php?id=D9I50C7O0&show_article=1
Q2 - April-June economic growth revised up to annualized 1.5%+
Japan's economy expanded an annualized real 1.5 percent in the April- June quarter, greater than the initially reported 0.4 percent, as data for corporate capital investment has been revised upward, government data showed Friday.
The growth in gross domestic product corresponds to an expansion of 0.4 percent from the previous quarter through March, also an upward revision from the earlier announced 0.1 percent rise, according to revised data from the Cabinet Office.
Cabinet Office Parliamentary Secretary Keisuke Tsumura said that the data showed that Japan's economy was "continuing to pick up" in the April-June quarter, but warned of risks overshadowing the outlook such as the yen's rise and the slowdown in the global economy.
Capital spending was revised upward to 1.5 percent growth from the originally estimated 0.5 percent expansion. Private inventory pushed down GDP by 0.1 percentage point, revised from the initial estimate of a negative contribution of 0.2 point.
The GDP deflator, a broad indicator of price trends, fell 1.0 percent from the previous quarter, unchanged from the initial report.
http://www.breitbart.com/article.php?id=D9I4OOF81&show_article=1
The growth in gross domestic product corresponds to an expansion of 0.4 percent from the previous quarter through March, also an upward revision from the earlier announced 0.1 percent rise, according to revised data from the Cabinet Office.
Cabinet Office Parliamentary Secretary Keisuke Tsumura said that the data showed that Japan's economy was "continuing to pick up" in the April-June quarter, but warned of risks overshadowing the outlook such as the yen's rise and the slowdown in the global economy.
Capital spending was revised upward to 1.5 percent growth from the originally estimated 0.5 percent expansion. Private inventory pushed down GDP by 0.1 percentage point, revised from the initial estimate of a negative contribution of 0.2 point.
The GDP deflator, a broad indicator of price trends, fell 1.0 percent from the previous quarter, unchanged from the initial report.
http://www.breitbart.com/article.php?id=D9I4OOF81&show_article=1
August - Corporate bankruptcy rate off 14%
The number of corporate bankruptcies in August fell 14.26 percent from a year earlier to 1,064 for the 13th consecutive month of year-on-year decline, with debts left behind by failed firms shrinking below the ¥200 billion level for the first time in 19 years and 10 months, a credit research firm said Wednesday.
Liabilities accompanying the corporate failures sank 33.52 percent to ¥188.92 billion due to government stimulus measures as well as business improvements, mainly major firms expanding their exports to vigorous emerging economies, Tokyo Shoko Research said.
The research company also noted that failures with liabilities of more than ¥10 billion were not reported for the first time since the bubble economy period of September 1990. Tokyo Shoko's monthly survey covers failures with debts of ¥10 million or more.
http://search.japantimes.co.jp/cgi-bin/nb20100909a7.html
Liabilities accompanying the corporate failures sank 33.52 percent to ¥188.92 billion due to government stimulus measures as well as business improvements, mainly major firms expanding their exports to vigorous emerging economies, Tokyo Shoko Research said.
The research company also noted that failures with liabilities of more than ¥10 billion were not reported for the first time since the bubble economy period of September 1990. Tokyo Shoko's monthly survey covers failures with debts of ¥10 million or more.
http://search.japantimes.co.jp/cgi-bin/nb20100909a7.html
Employment Conditions Difficult
The economic package the government compiled recently includes measures to help new university graduates find jobs.
Just 91.8 percent of this spring's university graduates received tentative job offers, the lowest figure in a decade. With deflation and the stronger yen dimming economic prospects, businesses expect to hire fewer new recruits next spring, further worsening the employment situation.
Prime Minister Naoto Kan has been bringing up employment at every opportunity, saying, "Employment comes first, second and third [in the government's priorities]." But the public wants to see results. Regardless of who wins the upcoming Democratic Party of Japan presidential race, the government must urgently ensure stable employment for young people, especially new university graduates.
The core of the government's support policy for new university grads is to promote employment at small and midsize companies willing to recruit staff.
===
Incentives needed
The government initially plans to increase the number of job counselors at universities and HelloWork job placement offices, and generate job offers from small and midsize firms through close coordination among these counselors. The plan also calls for raising awareness among new university graduates of the advantages of working at small and midsize companies, thereby expanding employment at such firms.
If many fresh university graduates land jobs at small and midsize firms possessing significant growth potential, it will revitalize the nation's industries.
Another plan will provide financial incentives to businesses that take on, as trial recruits and trainees, people who fail to find jobs after graduation or repeat a year at university. Money also will be paid to companies that hire people who graduated within the past three years as part of their intake of new graduates.
The employment situation remains grim. Providing these financial incentives could be necessary to encourage corporate recruitment. By the same token, it is essential to correct the situation in which people's chances for employment evaporate if a year or more passes after their graduation from university.
===
No time to waste
In the meantime, an increasing number of firms have been transferring their production overseas to deal with falling domestic demand caused by the stronger yen and the declining birthrate and aging population. This structural change cannot be solved fundamentally simply by increasing the number of job counselors and offering companies cash incentives.
The "new growth strategy," which the government decided on in June, calls for quickly ending deflation and putting the national economy on the road to full-scale recovery.
Undoubtedly, a strategy to heighten corporate desire for recruitment is indispensable, but the government has been slow to take action to achieve this goal.
In the economic package compiled recently, the government called for assisting technological development by small and midsize companies, regulatory and institutional reforms and tax incentives aimed at stimulating domestic investment.
Recent surveys have shown many university students lack professionalism and have poor communication skills. When hiring staff, however, more and more companies prize attributes such as specialized skills and expertise that could enable their employees to work globally.
We urge the government, universities and students themselves to face up to--and adapt to--this reality.
http://www.yomiuri.co.jp/dy/editorial/T100906002878.htm
Just 91.8 percent of this spring's university graduates received tentative job offers, the lowest figure in a decade. With deflation and the stronger yen dimming economic prospects, businesses expect to hire fewer new recruits next spring, further worsening the employment situation.
Prime Minister Naoto Kan has been bringing up employment at every opportunity, saying, "Employment comes first, second and third [in the government's priorities]." But the public wants to see results. Regardless of who wins the upcoming Democratic Party of Japan presidential race, the government must urgently ensure stable employment for young people, especially new university graduates.
The core of the government's support policy for new university grads is to promote employment at small and midsize companies willing to recruit staff.
===
Incentives needed
The government initially plans to increase the number of job counselors at universities and HelloWork job placement offices, and generate job offers from small and midsize firms through close coordination among these counselors. The plan also calls for raising awareness among new university graduates of the advantages of working at small and midsize companies, thereby expanding employment at such firms.
If many fresh university graduates land jobs at small and midsize firms possessing significant growth potential, it will revitalize the nation's industries.
Another plan will provide financial incentives to businesses that take on, as trial recruits and trainees, people who fail to find jobs after graduation or repeat a year at university. Money also will be paid to companies that hire people who graduated within the past three years as part of their intake of new graduates.
The employment situation remains grim. Providing these financial incentives could be necessary to encourage corporate recruitment. By the same token, it is essential to correct the situation in which people's chances for employment evaporate if a year or more passes after their graduation from university.
===
No time to waste
In the meantime, an increasing number of firms have been transferring their production overseas to deal with falling domestic demand caused by the stronger yen and the declining birthrate and aging population. This structural change cannot be solved fundamentally simply by increasing the number of job counselors and offering companies cash incentives.
The "new growth strategy," which the government decided on in June, calls for quickly ending deflation and putting the national economy on the road to full-scale recovery.
Undoubtedly, a strategy to heighten corporate desire for recruitment is indispensable, but the government has been slow to take action to achieve this goal.
In the economic package compiled recently, the government called for assisting technological development by small and midsize companies, regulatory and institutional reforms and tax incentives aimed at stimulating domestic investment.
Recent surveys have shown many university students lack professionalism and have poor communication skills. When hiring staff, however, more and more companies prize attributes such as specialized skills and expertise that could enable their employees to work globally.
We urge the government, universities and students themselves to face up to--and adapt to--this reality.
http://www.yomiuri.co.jp/dy/editorial/T100906002878.htm
Summer Travelers Aborad rise 10%
The combined number of people who departed from or entered Japan via Narita airport between July 15 and Aug. 31 grew 9.5 percent over a year earlier to 3.929 million, the Tokyo Regional Immigration Bureau's branch office in the airport said in a preliminary report.
The number eclipsed the 3.76 million posted in the same summer vacation period of 2008, before the Lehman shock, the Justice Ministry unit said Friday.
The unit attributed the rebound in the number of travelers to an easing of the global economic downturn and the reduced threat of the new strain of influenza.
Japanese citizens who left Japan from the airport during the 48-day period came to 1.331 million, up 8.2 percent from a year before, while the number of foreigners who departed stood at 672,400, up 13.6 percent.
The number of Japanese who returned to the country via the airport during the period amounted to 1.30 million, up 9.7 percent, while that of foreigners who entered Japan through Narita grew 7.9 percent to 625,800.
Of the foreigners who entered Japan via the airport, Chinese citizens accounted for 82,000, far eclipsing the 49,000 seen a year earlier. The surge appears to have stemmed from a relaxation by the government in July of requirements for visas for individual Chinese tourists, the immigration bureau office said.
http://search.japantimes.co.jp/cgi-bin/nn20100905b1.html
The number eclipsed the 3.76 million posted in the same summer vacation period of 2008, before the Lehman shock, the Justice Ministry unit said Friday.
The unit attributed the rebound in the number of travelers to an easing of the global economic downturn and the reduced threat of the new strain of influenza.
Japanese citizens who left Japan from the airport during the 48-day period came to 1.331 million, up 8.2 percent from a year before, while the number of foreigners who departed stood at 672,400, up 13.6 percent.
The number of Japanese who returned to the country via the airport during the period amounted to 1.30 million, up 9.7 percent, while that of foreigners who entered Japan through Narita grew 7.9 percent to 625,800.
Of the foreigners who entered Japan via the airport, Chinese citizens accounted for 82,000, far eclipsing the 49,000 seen a year earlier. The surge appears to have stemmed from a relaxation by the government in July of requirements for visas for individual Chinese tourists, the immigration bureau office said.
http://search.japantimes.co.jp/cgi-bin/nn20100905b1.html
MLBL Impacts - Shortage of Money
Japan may be in the midst of a silent epidemic of kinketsu-byo ("lack of money disease"). The source of the infection is a new statute that bans many borrowers from obtaining unsecured loans.
While the full repercussions of the revised Money Lending Business Law (MLBL), which was passed in 2006 but went into force on June 18, are still unclear, the law's impact appears likely to affect discretionary spending by hundreds of thousands, if not millions, of people who are no longer eligible to borrow. It is feared that many, desperate for a short-term infusion of cash, will turn to illegal loan sharks.
Two days before the new law took effect, the Sankei newspaper (June 16) had reported "chaos" at ATMs, with customers besieging sarakin (consumer loan) companies. Many borrowers, a good deal of whom appeared to be housewives, were caught unaware of the impending law. This was due, in many cases, to the sarakin firms' inability to notify them about the new law by mail or telephone, in some cases because the borrowers had taken out loans without the knowledge of their spouses.
Learning only at the eleventh hour, the borrowers rushed to obtain a last infusion of cash, only to find the credit faucets had been turned off.
"All we could do was apologize to them," a harried staff member of Promise, one of the big four loan companies, was quoted as saying.
By Aug. 17, the first data arrived showing that the law was indeed having a pronounced effect on borrowing. The Japan Financial Services Association announced the year-on amount of loans to consumers by its member companies during June fell by 32.6 percent over 2009, to ¥331.394 billion — and the one-month drop in loans issued from May, 18.6 percent, was the highest ever recorded.
Sources in the financial industry estimate as many as half the estimated 15 million customers of these companies have already maxed out on their loan limits — creating as many as 7.5 million "loan refugees" who will be ineligible for further credit.
Sarakin, an abbreviation of sarariman kinyu (credit for wage earners), offer small unsecured (i.e., uncollateralized) loans with minimal red tape. They first appeared around 1930, but did not become widely established until the period of high economic growth in the 1970s.
The aggressive and heavy-handed collection tactics unleashed on the unfortunates who fell behind in their payments spawned the term sarakin jigoku (loan-shark hell). The system also created great wealth for a few major players: In 2005, three of the five wealthiest individuals in Japan were said to be principals of sarakin companies.
On the surface, the new law appears to protect consumers, reducing the highest allowable interest from 29.2 percent per annum to between 15 and 20 percent in three increments depending on the loan amount.
But another stipulation of the MLBL has created a credit squeeze. Lenders are prohibited from extending new loans when total debts exceed one-third of annual income.
The new law also prohibits wives from borrowing against their husband's income without his written agreement.
"It's believed that 38 percent of the housewives who take out loans conceal it from their husbands," a loan consultant named Mikio Kobayashi told the tabloid Nikkan Gendai (May 19). "The new law is likely to drive these women to illegal moneylenders who will charge much higher rates, and they may find themselves in desperate straits just to pay the interest."
According to a survey conducted by the Japan Financial Services Association at the end of 2008, consumers' four main reasons for taking out such loans were to pay for living costs (34.3 percent); to pay back other loans (20.4 percent); to supplement their businesses (10.2 percent); and to purchase goods (2.9 percent).
With workers' wage increases and bonuses on hold, the new law puts the squeeze on households at the worst possible time. News site President Reuters (June 17) quoted a think tank at Waseda University that expects the shortfall may negatively impact Japan's 2010 GDP by as much as 0.237 percent. Some estimates fear a cash shortfall would hit leisure and other outlays, causing the GDP to drop by ¥1 trillion.
In a June 20 editorial, the Matsue City-based San-in Chuo Shimpo newspaper showed sympathy for those who face severe financial straits but don't meet the stricter credit check criteria, remarking, "Providing relief to disadvantaged people is an important political issue, and the present administration needs to work at providing a safety net."
Meanwhile the business magazine Weekly Diamond (July 31) predicted that at the present rates of attrition, the big four sarakin companies — Acom, Takefuji, Promise and Aiful — would be out of business within two and a half to three years. While few are likely to mourn their demise, the question remains: Where will people turn for an infusion of quick cash?
When the revised law was enacted in 2006, no one could have foreseen the "Lehman Shock" and ensuing collateral damage, such as cutbacks in hiring, wage freezes and reduced bonuses. Despite the law's good intentions, it has been hit by the law of unintended consequences — and low-income households will be paying a high price.
http://search.japantimes.co.jp/cgi-bin/fd20100829bj.html
While the full repercussions of the revised Money Lending Business Law (MLBL), which was passed in 2006 but went into force on June 18, are still unclear, the law's impact appears likely to affect discretionary spending by hundreds of thousands, if not millions, of people who are no longer eligible to borrow. It is feared that many, desperate for a short-term infusion of cash, will turn to illegal loan sharks.
Two days before the new law took effect, the Sankei newspaper (June 16) had reported "chaos" at ATMs, with customers besieging sarakin (consumer loan) companies. Many borrowers, a good deal of whom appeared to be housewives, were caught unaware of the impending law. This was due, in many cases, to the sarakin firms' inability to notify them about the new law by mail or telephone, in some cases because the borrowers had taken out loans without the knowledge of their spouses.
Learning only at the eleventh hour, the borrowers rushed to obtain a last infusion of cash, only to find the credit faucets had been turned off.
"All we could do was apologize to them," a harried staff member of Promise, one of the big four loan companies, was quoted as saying.
By Aug. 17, the first data arrived showing that the law was indeed having a pronounced effect on borrowing. The Japan Financial Services Association announced the year-on amount of loans to consumers by its member companies during June fell by 32.6 percent over 2009, to ¥331.394 billion — and the one-month drop in loans issued from May, 18.6 percent, was the highest ever recorded.
Sources in the financial industry estimate as many as half the estimated 15 million customers of these companies have already maxed out on their loan limits — creating as many as 7.5 million "loan refugees" who will be ineligible for further credit.
Sarakin, an abbreviation of sarariman kinyu (credit for wage earners), offer small unsecured (i.e., uncollateralized) loans with minimal red tape. They first appeared around 1930, but did not become widely established until the period of high economic growth in the 1970s.
The aggressive and heavy-handed collection tactics unleashed on the unfortunates who fell behind in their payments spawned the term sarakin jigoku (loan-shark hell). The system also created great wealth for a few major players: In 2005, three of the five wealthiest individuals in Japan were said to be principals of sarakin companies.
On the surface, the new law appears to protect consumers, reducing the highest allowable interest from 29.2 percent per annum to between 15 and 20 percent in three increments depending on the loan amount.
But another stipulation of the MLBL has created a credit squeeze. Lenders are prohibited from extending new loans when total debts exceed one-third of annual income.
The new law also prohibits wives from borrowing against their husband's income without his written agreement.
"It's believed that 38 percent of the housewives who take out loans conceal it from their husbands," a loan consultant named Mikio Kobayashi told the tabloid Nikkan Gendai (May 19). "The new law is likely to drive these women to illegal moneylenders who will charge much higher rates, and they may find themselves in desperate straits just to pay the interest."
According to a survey conducted by the Japan Financial Services Association at the end of 2008, consumers' four main reasons for taking out such loans were to pay for living costs (34.3 percent); to pay back other loans (20.4 percent); to supplement their businesses (10.2 percent); and to purchase goods (2.9 percent).
With workers' wage increases and bonuses on hold, the new law puts the squeeze on households at the worst possible time. News site President Reuters (June 17) quoted a think tank at Waseda University that expects the shortfall may negatively impact Japan's 2010 GDP by as much as 0.237 percent. Some estimates fear a cash shortfall would hit leisure and other outlays, causing the GDP to drop by ¥1 trillion.
In a June 20 editorial, the Matsue City-based San-in Chuo Shimpo newspaper showed sympathy for those who face severe financial straits but don't meet the stricter credit check criteria, remarking, "Providing relief to disadvantaged people is an important political issue, and the present administration needs to work at providing a safety net."
Meanwhile the business magazine Weekly Diamond (July 31) predicted that at the present rates of attrition, the big four sarakin companies — Acom, Takefuji, Promise and Aiful — would be out of business within two and a half to three years. While few are likely to mourn their demise, the question remains: Where will people turn for an infusion of quick cash?
When the revised law was enacted in 2006, no one could have foreseen the "Lehman Shock" and ensuing collateral damage, such as cutbacks in hiring, wage freezes and reduced bonuses. Despite the law's good intentions, it has been hit by the law of unintended consequences — and low-income households will be paying a high price.
http://search.japantimes.co.jp/cgi-bin/fd20100829bj.html
July - Deflation continues, Unemployment down
TOKYO — Japan's consumer prices continued to slide while the unemployment rate fell for the first time in six months in July, as mixed data Friday illustrated the headwinds facing a fragile recovery.
Japan's core consumer price index fell 1.1 percent in July from a year earlier, government data showed, marking the 17th straight month of decline as Japan remains mired in deflation.
The core consumer price index, which excludes volatile fresh food items, was in line with market expectations, according to a Dow Jones Newswires poll of economists.
The latest consumer price data will raise further questions over the durability of Japan's fragile recovery, which has come under further pressure from the effects of a strong yen and uncertainty over the global economy.
It will also challenge the government's stated goal of ending deflation in the fiscal year starting April 2011, as it piles pressure on the Bank of Japan to take further steps to support the economy.
The central bank has long kept its key rate at a rock-bottom 0.1 percent and analysts say it has little room for further manoeuvre.
"I hope the BoJ will do its utmost," Vice Finance Minister Motohisa Ikeda said Thursday. "Exiting deflation remains the most important goal for us and I am also very concerned about the recent yen gains."
The current strength of the yen, which this week hit 15-year highs against the dollar, threatens exporters as it erodes repatriated profits and makes their goods relatively more expensive overseas.
It also makes imports cheaper, helping to keep prices low. Persistent deflation prompts consumers to defer purchases in the hope of further price falls and dissuades corporate capital spending.
In one glimmer of light, however, Japan's unemployment rate edged lower to 5.2 percent in July, its first fall in six months, dropping by 0.1 percentage points from June, government data showed Friday.
The July figure was slightly better than market expectations of 5.3 percent, the previous month's level.
In separate data, the government said that household spending in July was up 1.1 percent from a year ago, but down 0.4 percent from June, illustrating a soft domestic demand picture.
Japan is set to outline fresh stimulus measures in the next few days, the government has said, with recent weak gross domestic product growth of an annualised 0.4 percent in the second quarter pointing to a slowdown.
On Wednesday data showed Japan's export growth slowed for a fifth straight month in July, as uncertainty over the global economy weighed on a sector crucial in offsetting weak domestic demand.
Japanese shares opened lower Friday following the release of the data, with the Tokyo Stock Exchange's Nikkei index losing 95.01 points or 1.07 percent to 8,811.47 points.
http://www.google.com/hostednews/afp/article/ALeqM5j_RkWImgGkO9og8qNQEFmhtwhP7Q
Japan's core consumer price index fell 1.1 percent in July from a year earlier, government data showed, marking the 17th straight month of decline as Japan remains mired in deflation.
The core consumer price index, which excludes volatile fresh food items, was in line with market expectations, according to a Dow Jones Newswires poll of economists.
The latest consumer price data will raise further questions over the durability of Japan's fragile recovery, which has come under further pressure from the effects of a strong yen and uncertainty over the global economy.
It will also challenge the government's stated goal of ending deflation in the fiscal year starting April 2011, as it piles pressure on the Bank of Japan to take further steps to support the economy.
The central bank has long kept its key rate at a rock-bottom 0.1 percent and analysts say it has little room for further manoeuvre.
"I hope the BoJ will do its utmost," Vice Finance Minister Motohisa Ikeda said Thursday. "Exiting deflation remains the most important goal for us and I am also very concerned about the recent yen gains."
The current strength of the yen, which this week hit 15-year highs against the dollar, threatens exporters as it erodes repatriated profits and makes their goods relatively more expensive overseas.
It also makes imports cheaper, helping to keep prices low. Persistent deflation prompts consumers to defer purchases in the hope of further price falls and dissuades corporate capital spending.
In one glimmer of light, however, Japan's unemployment rate edged lower to 5.2 percent in July, its first fall in six months, dropping by 0.1 percentage points from June, government data showed Friday.
The July figure was slightly better than market expectations of 5.3 percent, the previous month's level.
In separate data, the government said that household spending in July was up 1.1 percent from a year ago, but down 0.4 percent from June, illustrating a soft domestic demand picture.
Japan is set to outline fresh stimulus measures in the next few days, the government has said, with recent weak gross domestic product growth of an annualised 0.4 percent in the second quarter pointing to a slowdown.
On Wednesday data showed Japan's export growth slowed for a fifth straight month in July, as uncertainty over the global economy weighed on a sector crucial in offsetting weak domestic demand.
Japanese shares opened lower Friday following the release of the data, with the Tokyo Stock Exchange's Nikkei index losing 95.01 points or 1.07 percent to 8,811.47 points.
http://www.google.com/hostednews/afp/article/ALeqM5j_RkWImgGkO9og8qNQEFmhtwhP7Q
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