Japanese household sentiment fell to a six-month low last month, indicating the need for measures to stimulate consumer spending and sustain a recovery from the country’s worst postwar recession.
The confidence index dropped to 37.6 last month from 39.5 in November, the Cabinet Office said yesterday in Tokyo. The government lowered its assessment of the report, describing sentiment as “weak.”
Japanese Finance Minister Naoto Kan yesterday urged lawmakers to pass a proposed ¥7.4 trillion (US$82 billion) extra budget for the current fiscal year, saying it would contribute 0.3 percentage point to economic growth.
Stimulus efforts implemented by the previous administration have begun to fade, signaling it is “far too early” to see a sustained recovery in consumer spending, economist Azusa Kato said.
“The stimulus was the only reason sentiment rallied as much as it did even when incomes were still plunging,” Kato, an economist at BNP Paribas in Tokyo, said before the report. “Sentiment is falling again because those boosts are waning, exposing the underlying weakness of domestic demand.”
Confidence among Japanese has been battered by 18 months of declining wages and unemployment near a postwar high.
A dearth of spending has caused consumer prices to decline for nine months as retailers discount products to attract customers.
The consumer confidence report, which also tracks households’ price expectations, showed that a growing number of consumers see deflation becoming more entrenched.
The portion of people expecting prices to fall exceeded those who see goods becoming more expensive for the first time since the survey began in April 2004. Thirty-two percent of consumers said prices would be lower a year from now, compared with 29 percent of those who see costs increasing.
Kan said yesterday that the economy was at risk of sliding back into a recession, stressing the need for parliament to pass the extra stimulus steps unveiled by Japanese Prime Minister Yukio Hatoyama last month.
“The economy is picking up, but it lacks strength for a self-sustained recovery,” Kan said.
The stimulus plan includes extending incentives introduced by the previous government to purchase environment-friendly products.
Not all analysts agree households will cut back amid signs of improvement in the job market.
The job-to-applicant ratio rose in November for a third month to 0.45, meaning there are 45 positions for every 100 candidates.
Manufacturers increased workers’ overtime hours for an eighth month as a jump in factory orders lifted labor demand.
Julian Jessop, chief international economist at Capital Economics Ltd in London, projects consumer spending will gain 1.8 percent this year.
“The purpose of the fiscal stimulus was to kick-start the economy and to stabilize the labor market. In that sense, it succeeded,” Jessop said. “We’re forecasting that consumer spending recovers its losses from the last two years.”
CHIP WAR: The new restrictions are expected to cut off China’s access to Taiwan’s technologies, materials and equipment essential to building AI semiconductors Taiwan has blacklisted Huawei Technologies Co (華為) and Semiconductor Manufacturing International Corp (SMIC, 中芯), dealing another major blow to the two companies spearheading China’s efforts to develop cutting-edge artificial intelligence (AI) chip technologies. The Ministry of Economic Affairs’ International Trade Administration has included Huawei, SMIC and several of their subsidiaries in an update of its so-called strategic high-tech commodities entity list, the latest version on its Web site showed on Saturday. It did not publicly announce the change. Other entities on the list include organizations such as the Taliban and al-Qaeda, as well as companies in China, Iran and elsewhere. Local companies need
CRITICISM: It is generally accepted that the Straits Forum is a CCP ‘united front’ platform, and anyone attending should maintain Taiwan’s dignity, the council said The Mainland Affairs Council (MAC) yesterday said it deeply regrets that former president Ma Ying-jeou (馬英九) echoed the Chinese Communist Party’s (CCP) “one China” principle and “united front” tactics by telling the Straits Forum that Taiwanese yearn for both sides of the Taiwan Strait to move toward “peace” and “integration.” The 17th annual Straits Forum yesterday opened in Xiamen, China, and while the Chinese Nationalist Party’s (KMT) local government heads were absent for the first time in 17 years, Ma attended the forum as “former KMT chairperson” and met with Chinese People’s Political Consultative Conference Chairman Wang Huning (王滬寧). Wang
CROSS-STRAIT: The MAC said it barred the Chinese officials from attending an event, because they failed to provide guarantees that Taiwan would be treated with respect The Mainland Affairs Council (MAC) on Friday night defended its decision to bar Chinese officials and tourism representatives from attending a tourism event in Taipei next month, citing the unsafe conditions for Taiwanese in China. The Taipei International Summer Travel Expo, organized by the Taiwan Tourism Exchange Association, is to run from July 18 to 21. China’s Taiwan Affairs Office spokeswoman Zhu Fenglian (朱鳳蓮) on Friday said that representatives from China’s travel industry were excluded from the expo. The Democratic Progressive Party government is obstructing cross-strait tourism exchange in a vain attempt to ignore the mainstream support for peaceful development
ELITE UNIT: President William Lai yesterday praised the National Police Agency’s Special Operations Group after watching it go through assault training and hostage rescue drills The US Navy regularly conducts global war games to develop deterrence strategies against a potential Chinese invasion of Taiwan, aimed at making the nation “a very difficult target to take,” US Acting Chief of Naval Operations James Kilby said on Wednesday. Testifying before the US House of Representatives Armed Services Committee, Kilby said the navy has studied the issue extensively, including routine simulations at the Naval War College. The navy is focused on five key areas: long-range strike capabilities; countering China’s command, control, communications, computers, cyber, intelligence, surveillance, reconnaissance and targeting; terminal ship defense; contested logistics; and nontraditional maritime denial tactics, Kilby
RSS