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Japan’s Consumer Confidence Index hits all-time low in June

In May, we saw Japan’s consumer confidence fall to its lowest level since December 2001. Late last week, the Cabinet Office released figures for June, and we now see that Japan’s consumer confidence has indeed fallen to its all-time low. According to the numbers, consumer confidence fell 1.3 points to hit 32.6, which is the lowest score seen since the survey was begun in June 1982 (though it was done quarterly instead of monthly until 2004).

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

Japan’s consumer confidence index plunges to near record-lows in May

Last month, we reported that April’s consumer confidence index had plunged to 5 year lows on the back of worries over increased prices and job uncertainty. On Friday, the Cabinet Office released figures for May, and we have seen yet another dive in the index. According to the Cabinet Office, the consumer confidence index fell from 35.2 in April to 33.9 in May.

May’s score was the lowest seen since December 2001, when the index dipped to 33 points. In its current form, the survey has been carried out since 1982 (though it was done quarterly instead of monthly until 2004). The 33 points registered in December 2001 stands as the all-time low.

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

• Consumer Confidence Index: 33.9 (-1.3)
• Overall Livelihood: 31.5 (-1.5)
• Income Growth: 37.5 (–0.9)
• Employment: 36.0 (-1.1)
• Willingness to buy durable goods: 33.2 (-1.5)

As in April, all five categories showed a decline. The “Willingness to buy durable goods” remains worryingly low. In fact, May’s score was the second lowest of all-time, after the 31.4 registered in March 1997.

At 31.5, the “Overall Livelihood” score is at its lowest level ever, breaking its record from the previous month. It’s also worth mentioning that no single score has ever dipped below the 30 point mark.

On the same day as these results were released, the Bank of Japan announced that it would not raise interest rates from their current 0.5% level. In his statement, Bank of Japan Governor Masaaki Shirakawa said that compared to April, “More now recognize the downside risk that domestic demand poses for the economy as well as the risk of rising prices.”

On Wednesday, two days before the survey was released, the Nikkei had this to say about consumer spending:

A Cabinet Office survey for May may weigh heavily on domestic demand-based stocks if it shows a further month-on-month deterioration in consumer confidence. The survey will be released on Friday, just when the summer sales season is about to get into full swing and with higher prices for daily necessities such as gasoline and bread making the outlook for consumer spending increasingly uncertain.

Since it hasn’t yet been reported in the major media, we have been following the deterioration of household spending on services and durable goods each month. As the “Willingness to buy durable goods” sub-index continues to fall lower and lower, strong declines in spending on durables and semi-durables have been seen: -6.56% in April, -10.41% in March and -3.65% in February. May’s consumer confidence data leaves little reason to be optimistic about household spending for that month. Overall household spending was down 2.7% in April, with a 0.1% decline in spending on goods and a 2.35% decline in spending on services.

May’s household spending data isn’t due out for a couple of weeks, though department store sales figures will be released later this week.

Japan’s consumer confidence plunges to 5 year lows in April amidst worries over higher prices

Last month, we reported a a slight rise in Japan’s consumer confidence levels, though it was not seen as indicative of a truly more optimistic view of the economy amongst consumers. Last Friday, the Cabinet Office reported that consumer confidence had taken a turn for the worse again in April.

April’s numbers seem dire indeed: The overall consumer confidence score fell from 36.7 points to 35.2, which was lower than the 36.1 seen in February. April’s score was the lowest since 34.7 was registered in March 2003.

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

Japan’s consumer confidence shows slight recovery in March

After five straight months of falling consumer confidence, and numbers at nearly a five-year low in February, March consumer confidence figures showed a slight recovery, according to the Cabinet Office. After having dropped to 36.1 in February, we saw consumer confidence at 36.7 in March, which is still below the score of 37.5 that was registered in January.

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

• Consumer Confidence Index: 36.7 (+0.6)
• Overall Livelihood: 34.4 (+0.7)
• Income Growth: 38.7 (–0.2)
• Employment: 37.6 (+0.6)
• Willingness to buy durable goods: 36.2 (+1.4)

Four of the five category scores rose in March, with “Income Growth” being the only score to continue its decline. “Willingness to buy durable goods” showed the strongest increase, though that score has been very low since about November. In March 2007, “Willingness to buy durable goods” scored at 48.9 - and that was the month in which we saw it drop below the 50 point line.

Although it is good to see consumer confidence stop falling, this cannot be seen as a strong recovery, and does not seem indicative of a more optimistic view for consumers, at least not yet. It was hard to imagine the numbers getting much lower than they were in February.

The Cabinet Office also said that 85.7 percent of those surveyed believed that prices would rise over the coming year. Although this is lower than the record high of 86.5% in February, it still reflects the fact that prices are indeed rising and that consumers don’t yet see any reprieve from such conditions. Combined with the worsening expectations for wage growth, this leaves little room to be optimistic about consumer spending over the coming months.

February Consumer Confidence down to nearly five year lows

On Wednesday, the Cabinet Office released it’s Consumer Confidence Index data for February 2008, and we continue to see a downward trend in the figures. After January’s score tumbled to 37.5, February’s index showed a further fall to 36.1 points.

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

• Consumer Confidence Index: 36.1 (-1.4)
• Overall Livelihood: 33.7 (-1.4)
• Income Growth: 38.9 (–0.5)
• Employment: 37.0 (-1.6)
• Willingness to buy durable goods: 34.8 (-1.9)

The first thing to note is that all five scores dropped in February. This last happened in December of 2007, as January 2008 had seen a rise in the “Overall Livelihood” category. In February, the “Overall Livelihood” score fell to its lowest level ever. Ever.

We think it’s worth taking a look at February 2008 data when compared to February 2007: Read more

Consumer Confidence Index slides again in January; Government subsidies for full-time employees?

Yesterday, the Cabinet Office released its Consumer Confidence Index data for January 2008, and the index showed a decline for the fourth consecutive month. After December’s figures showed consumer confidence dipping to 38.0, its lowest level since June 2003, January saw another fall to 37.5.

We can’t say the the continued fall in consumer confidence is surprising, even though recent GDP data showed a slight (0.2%) increase in consumer spending. Consumer confidence scores tend to factor in future expectations of the economy, and the January data shows nearly 85% of households expecting to see prices increase over the coming year. Let’s look at a breakdown for the individual category scores in January:

* Consumer Confidence Index: 37.5 (-0.5)
* Overall Livelihood: 35.1 (+0.2)
* Income Growth: 39.4 (–0.5)
* Employment: 38.6 (-2.0)
* Willingness to buy durable goods: 36.7 (-0.3)

First, we should note that while all five scores fell in January, we did see an increase in the “Overall Livelihood” category in January. However, scores for “Income Growth” and “Employment” continue their declines. A year ago, in January 2007, the “Income Growth” score stood at 44.7 and the “Employment” score was at 51.8. Both would then see an increase in February. Thus, over the past year, we have seen the “Income Growth” score shed 5.3 points and the “Employment” index decline by a whopping 13.2 points.

Although “Overall Livelihood” increased slightly in January, a year ago it stood at 45.8, meaning that we have seen this score fall by 10.7 points over the past year. The “Willingness to buy durable goods” score has declined 13.5 points over the past year, while the overall index has slid 10.6 points.

This is quite a strong downtrend, and we don’t see any reasons for it to reverse any time in the next quarter. The specter of higher prices to come is not expected to clear up, and we fully expect to see an announcement of further losses at financial firms connected to subprime holdings, which may put a damper on hiring.

The only positive news we’ve heard recently was presented in a non-positive way. In this morning’s edition of the Nikkei, we learned that the government is planning to encourage firms to switch more workers from part-time to full-time status. Of course, this is something that can potentially cost companies quite a bit of money, and thus bite into their profits. Thus, the government needs to find some way of reducing the costs incurred by such moves.

The solution? As the Nikkei puts it:

To entice more companies into offering full-time positions to their contract and part-time workers, the Labor Ministry plans to set up a subsidy program in April to support hiring of full-timers by small and midsize businesses.

Subsidies? We’re going to see employment further subsidized? Is anyone serious about treating the underlying casuses of the problem? At any rate, the government is apparently seeking 500 million yen in next year’s budget to subsidize small and medium size firms. Of course, these newly-minted full-time workers would be automatically enrolled in the nations pension program, and the subsidy is meant to offset that cost.

The Nikkei also tells us:

The Labor Ministry believes that more full-time workers, who receive higher wages than their non-full-time counterparts, will help bring stability to the nation’s pension system and other social security programs.

Sure, provided they contribute more than the 500 million yen it cost to get them on the rolls in the first place. And what happens when the subsidy is cut off? Will small and medium size firms simply be left to suffer the legacy costs?

Consumer Confidence Index slips yet again in December

Earlier today, the Cabinet Office released its Consumer Confidence Index data for December 2007, and the results are not pretty. After November’s figures showed consumer confidence dipping to 39.8, its lowest level since December 2003, December saw another significant fall to 38.0. This is the lowest score we’ve seen since June 2003, when Japan’s consumer confidence stood at 36.9.

We can’t say the the December figures are surprising; in fact, there’s been little excitement watching these figures get worse and worse each month. Let’s look at a breakdown for the individual category scores in December: Read more

Japan’s consumer confidence at four year low in November

Yesterday, the Cabinet Office released the results of its consumer confidence survey for November, and the results were not pretty. Last month, we noted that consumer confidence was at three year lows and was coming dangerously close to being in the “30s.” That happened in November.

The overall consumer confidence index itself fell 3 points to 39.8, the lowest score seen since December 2003. The score for “Overall Livelihood” fell 4 points to 37, for its lowest score since March 2003.

The consumer confidence index registers a score that is considered even at 50. A score above 50 indicates that optimists outnumber pessimists. The survey has not hit the 50 point level since April 2006, and has not been above the 50 point level since the second quarter of 1990, when it was at 50.3. Read more

Japan’s October consumer confidence dives to lowest level since March 2004

In August, we saw Japan’s consumer confidence index slip to a 32 month low, when it stood at 44.0 points. In September, the index was pushed up slightly, to 44.1, and we attributed that increase to a boost in the score concerning the “Willingness to buy durable goods.”

Although we expected October to decline again, the results are worse than expected. Today, the Cabinet Office announced results for October’s consumer confidence survey, and the score has dropped to 42.8. This is lowest score seen since 42.7 was registered in March 2004.

A score above 50 indicates that optimists outnumber pessimists. The survey has not hit the 50 point level since April 2006, and has not been above the 50 point level since the second quarter of 1990, when it was at 50.3.

The report generates five total scores: The Consumer Confidence Index, Overall livelihood, Income Growth, Employment, and Willingness to buy durable goods. The breakdown of those scores for October was as follows:

• Consumer Confidence Index: 42.8 (-1.3)
• Overall Livelihood: 41.0 (-1.2)
• Income Growth: 42.2 (–0.2)
• Employment: 45.3 (-1.1)
• Willingness to buy durable goods: 42.8 (-2.7)

The decline was led by a huge drop in the “Willingness to buy durable goods” category, which fell 2.7 points. As we pointed out last month, this score tends to fluctuate wildly and see the largest jumps from month to month.

What we’re seeing now is some of the scores getting dangerously close to breaking below 40 and ending up in the high 30s, which has not been seen since December 2003, when the overall score stood at 39.2.

Japan’s consumer confidence inches up in September

According to data released by the Cabinet Office on Friday, Japan’s Consumer Confidence level has inched up a tad from the 32 month low we saw last month. The overall score for consumer confidence moved up by 0.1 points, to 44.1. A score above 50 indicates that optimists outnumber pessimists. The survey has not hit the 50 point level since April 2006, and has not been above the 50 point level since the second quarter of 1990, when it was at 50.3.

The report generates five total scores: The Consumer Confidence Index, Overall livelihood, Income Growth, Employment, and Willingness to buy durable goods. The breakdown of those scores for September was as follows:

Consumer Confidence Index: 44.1 (+0.1)
Overall Livelihood: 42.2 (+0.3)
Income Growth: 42.4 (–)
Employment: 46.4 (-0.6)
Willingness to buy durable goods: 45.5 (+0.8)

Last month, we predicted that a further fall in the employment subindex would keep the overall score low again. The jump in Willingness to buy consumer goods helped nudge September’s numbers into positive territory, but that score tends to swing wildly.

The employment score, now at 46.4, is is considerably lower than it was a year ago, when it broke the 50 point level in 11 out of 12 months and stood at 50.9 in September 2006. The current figure is the lowest seen since the employment subindex hit 44 points in December 2004.

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