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Japan’s consumer confidence up slightly in January, worries over job security worsen

February 10, 2009
By Ken Worsley


After having set record lows for four consecutive months, Japan’s consumer confidence index rose by 0.2 points in January to hit 26.4, according to data released today by the Cabinet Office. Although the increase is welcome, it is hardly encouraging, and by no means leaves the impression that Japanese consumers are going to feel significantly better about the economy any time soon.

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 January’s figures, with the change from the previous month:

  • Consumer Confidence Index: 26.4 (+0.2)
  • Overall Livelihood: 29.2 (+0.7)
  • Income Growth: 31.4 (-0.1)
  • Employment: 14.2 (-1.2)
  • Willingness to buy durable goods: 30.6 (+1.2)

The only real encouraging number here is the increase in the “Willingness to buy durable goods” category. The continued drops in scores for employment and income growth, both of which hit all-time lows in January, indicate strong concerns over employment security and the ability to spend over the coming months. In January 2008, the employment score stood at 38.6, while two years ago it was in positive territory, at 51.8 points. Income growth, perhaps unsurprisingly, has not been in positive territory since it stood at 50.1 back in September 1991.

According to the Health, Labor and Welfare Ministry’s December’s labor force survey, average wages fell 1.4% overall and 1.6% at firms with 30 or more employees. Thus, although declines in some categories of consumer prices may be welcome news to shoppers, buying power is being eroded by stagnant to negative wage growth.

With fourth quarter GDP expected to have shrunk somewhere in the 3-3.5% range, next week’s official announcement of those numbers is unlikely to raise the spirits of consumers. While it seems difficult for the index to dip much lower than December’s record low, consumer confidence is not expected to make a strong turn upwards.

Filed Under Cabinet Office, Consumer Confidence Index, Economic Reports 

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Comments

3 Responses to “Japan’s consumer confidence up slightly in January, worries over job security worsen”

  1. DaColl on February 12th, 2009 11:55 am

    Hmm, an ‘increase’ in consumer confidence?
    Are people really starting to buy into the government’s propoganda campain?

    We are seeing an increase in the ‘under-employed’ and ‘working poor’ labor force. Workers are openly concerned with losing their jobs to lower payed, imported labor. Years of deflation caused a decrease in over-all take-home pay, and now recent inflation has begun to eat away at current lower wages.

    I’m guessing that the Consumer Confidence Index is survey based, and thus a more ’subjective’ number. This permits the government to ‘tweak’ the numbers when necessary for a positive news story.

    Perhaps they only interviewed the lucky workers still employed after the recent round of job cuts!

  2. Ken Worsley on February 12th, 2009 2:29 pm

    Are people really starting to buy into the government’s propoganda campain?

    With the consumer confidence index at 26.4? It doesn’t seem likely.

    What is “the government’s propoganda campain? (sic)”?

  3. Japan - Engine Failure | Bear Market Investments on March 31st, 2009 12:46 am

    […] for the outlook where most domestic companies are preparing their operations for a tough recession. Ken Worsley parses the entrails of the consumer confidence report and notes that the slight increase in the […]

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