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Japan’s consumer confidence hits all-time low in October

November 12, 2008
By Ken Worsley


In August, Japan’s consumer confidence index hit its all-time low for the third month in a row, at 30.1 points. That figure recovered slightly on the back of slightly lower oil prices in September, to 31.4 points. However, according to data released by the Cabinet Office today, the consumer confidence index slipped under the 30 point mark in October to 29.4, a fresh all-time low.

The Consumer Confidence Index itself contains five scores, each of which is considered positive when above 50, and pessimistic when below the 50 mark. Here’s a breakdown for October figures, with the change from last month:

  • Consumer Confidence Index: 29.4 (-2.0)
  • Overall Livelihood: 29.6 (-1.0)
  • Income Growth: 34.5 (-1.3)
  • Employment: 24.8 (-4.1)
  • Willingness to buy durable goods: 28.8 (-1.5)

All five scores showed a decline in October, with the “Employment” category taking a heavy beating. Last month’s post on the consumer confidence index revolved around declining oil prices and whether or not this would help spur consumer spending in the near-term. I remain pessimistic on this front. Clearly, consumers are worried about their employment situations. “Income Growth” was at an all-time low in October, while “Employment” is down 20.5 points from a year ago (yes, that’s correct). In October, “Willingness to buy durable goods” was below the 30 point mark for the first time ever - and 14 points lower than a year ago.

Still, spending on goods and services was up 1.51% in September, with spending on durable and semi-durable goods up 1.54%. Although we don’t have the space to get into bankruptcies on this post, over 16,000 workers in japan were put out of work by large corporate failures in October. Further pain seems to be anticipated by the public, who have become increasingly worried about job security - a condition that makes sense when we continue to see a growth in the percentage of the work force employed on a temporary or contract basis.

In the short term, shrinking profits are bound to continue hurting employment conditions, and thus consumer spending. The government’s stimulus package is expected to do little to boost spirits - 12,000 yen per family member of a citizen/permanent resident household? To be honest, I’d rather they kept the money and spent it on debt servicing.

Comments from those in charge continue to disappoint. Earlier today, Bloomberg quoted newly appointed Bank of Japan Deputy Governor Hirohide Yamaguchi as telling Parliament:

The economy is becoming more sluggish. We need to pay close attention to downside risks for the economy given conditions in overseas economies and global financial markets.

We didn’t bother reporting on his appointment back on October 24, or his promotion to Deputy Chief on October 27. His comments fail to inspire regret.

Filed Under Cabinet Office, Consumer Confidence Index, Economic Reports 

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Comments

2 Responses to “Japan’s consumer confidence hits all-time low in October”

  1. Steven Towns on November 14th, 2008 12:24 pm

    Ken, we’re on the same page, have been for a while now and will likely continue to be — lower prices at the pump help, but unfortunately are not a panacea. First and foremost (in Japan, USA, and elsewhere), job security (more like massive insecurity these days) weighs mighty heavily on the desire to spend vs. the need to spend. You’re right, GOJ is better off servicing debt. Either make it a more meaningful amount or none at all. In either case Japan is still at the mercy of the rest of the world’s consumers, thus a govt handout is a quick, but not a long-lasting, fix. Reality is no friend of (fill in the blank).

  2. Japan’s GDP shrinks 0.1% in the July-September quarter Japan Economy News & Blog - Business, Economy, Marketing and Economic Reports on November 18th, 2008 12:25 am

    […] question thus must now focus on how long recessionary conditions will continue. We know that the consumer confidence index and economic sentiment amongst small businesses were both at all-time lows in […]

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