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.”
CROSS-STRAIT COLLABORATION: The new KMT chairwoman expressed interest in meeting the Chinese president from the start, but she’ll have to pay to get in Beijing allegedly agreed to let Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) meet with Chinese President Xi Jinping (習近平) around the Lunar New Year holiday next year on three conditions, including that the KMT block Taiwan’s arms purchases, a source said yesterday. Cheng has expressed interest in meeting Xi since she won the KMT’s chairmanship election in October. A source, speaking on condition of anonymity, said a consensus on a meeting was allegedly reached after two KMT vice chairmen visited China’s Taiwan Affairs Office Director Song Tao (宋濤) in China last month. Beijing allegedly gave the KMT three conditions it had to
‘BALANCE OF POWER’: Hegseth said that the US did not want to ‘strangle’ China, but to ensure that none of Washington’s allies would be vulnerable to military aggression Washington has no intention of changing the “status quo” in the Taiwan Strait, US Secretary of Defense Pete Hegseth said on Saturday, adding that one of the US military’s main priorities is to deter China “through strength, not through confrontation.” Speaking at the annual Reagan National Defense Forum in Simi Valley, California, Hegseth outlined the US Department of Defense’s priorities under US President Donald Trump. “First, defending the US homeland and our hemisphere. Second, deterring China through strength, not confrontation. Third, increased burden sharing for us, allies and partners. And fourth, supercharging the US defense industrial base,” he said. US-China relations under
The Chien Feng IV (勁蜂, Mighty Hornet) loitering munition is on track to enter flight tests next month in connection with potential adoption by Taiwanese and US armed forces, a government source said yesterday. The kamikaze drone, which boasts a range of 1,000km, debuted at the Taipei Aerospace and Defense Technology Exhibition in September, the official said on condition of anonymity. The Chungshan Institute of Science and Technology and US-based Kratos Defense jointly developed the platform by leveraging the engine and airframe of the latter’s MQM-178 Firejet target drone, they said. The uncrewed aerial vehicle is designed to utilize an artificial intelligence computer
The Chinese Nationalist Party (KMT) caucus yesterday decided to shelve proposed legislation that would give elected officials full control over their stipends, saying it would wait for a consensus to be reached before acting. KMT Legislator Chen Yu-jen (陳玉珍) last week proposed amendments to the Organic Act of the Legislative Yuan (立法院組織法) and the Regulations on Allowances for Elected Representatives and Subsidies for Village Chiefs (地方民意代表費用支給及村里長事務補助費補助條例), which would give legislators and councilors the freedom to use their allowances without providing invoices for reimbursement. The proposal immediately drew criticism, amid reports that several legislators face possible charges of embezzling fees intended to pay
RSS