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

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

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

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

How Japanese Students Live

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

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

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

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

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

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

Toyota City Businesses Worried by Toyota Shock II

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

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

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

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

Why Japan's Debt Problems are overstated

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

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

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

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

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

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

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

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

Bank Lending Falls by most in 4 years in January

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

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

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

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

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

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

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

Salaries Continue to Fall

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

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

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

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

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

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

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

Nagoya Shock - Mark II

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

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