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Recent Economic Developments- Monthly Economic Report, May 28 2020 -
June 5, 2020
Cabinet OfficeGovernment of Japan
(Changed)
(Changed)
May
<Assessment of the current state of the Japanese economy>
April The Japanese economy is getting worse rapidly in anextremely severe situation, due to the Novel Coronavirus.
The Japanese economy is worsening rapidly in anextremely severe situation, due to the Novel Coronavirus.
March The Japanese economy is in a severe situation, extremelydepressed by the Novel Coronavirus.
May
April
1
Note: ↑ denotes upward revision and ↓ denotes downward revision.
<Assessment of the current state of the Japanese economy>March April May
Private consumptionPrivate consumption is showing
weakness recently, due to theinfluence of the infectious disease.
Private consumption is decreasingrapidly, due to the influence of the
infectious disease. (↓)Unchanged
Business investment Business investment is almost flat. Unchanged Business investment is in a weaktone recently. (↓)
Exports Exports are in a weak tone.Exports are decreasing recently, due
to the influence of the infectiousdisease. (↓)
Exports are decreasing rapidly, dueto the influence of the infectious
disease. (↓)
Industrial production Industrial production remains in aweak tone.
Industrial production is decreasing,due to the influence of the infectious
disease. (↓)Unchanged
Corporate profits Corporate profits are in a weak tonemainly among manufacturers.
Corporate profits are decreasingrapidly, due to the influence of the
infectious disease. (↓)Unchanged
Firms’ judgments onbusiness conditions
Firms’ judgments on currentbusiness conditions are
deteriorating, due to the influence ofthe infectious disease.
Firms’ judgments on currentbusiness conditions are deterioratingrapidly, due to the influence of the
infectious disease. (↓)
Unchanged
Employmentsituation
Employment situation is affected bythe infectious disease although it
has been improving.
Employment situation is seen someweak movements lately, due to theinfluence of the infectious disease.
(↓)
Employment situation shows someweak movements further, due to theinfluence of the infectious disease.
(↓)
Prices Consumer prices are flat recently. Unchanged Consumer prices are flat.
2
<Short-term prospects>
April
May
An extremely severe situation is expected to remain due to the influence of theinfectious disease. Moreover, full attention should be given to the further downsiderisks to the domestic and foreign economy which are affected by the influence of theinfectious disease. Also, attention should be given to the effects of fluctuations in thefinancial and capital markets.
An extremely severe situation is expected to remain due to the influence of theinfectious disease for the time being, although the socio-economic activities will beresumed gradually with taking measures to prevent the spread of infectious diseases.Also, attention should be given to the effects of fluctuations in the financial and capitalmarkets.
March A severe situation is expected to remain due to the influence of the infectious disease.Moreover, full attention should be given to the further downside risks to the domesticand foreign economy which are affected by the influence of the infectious disease.Also, attention should be given to the effects of fluctuations in the financial and capitalmarkets.
3
The Government will make its utmost efforts to ensure the economy overcomes deflation and achieve economic revitalization and fiscalconsolidation simultaneously, in addition to make effort toward the reconstruction and revitalization from the Great East Japan Earthquakeand the restoration and reconstruction from the 2016 Kumamoto Earthquake. To this end, the Government will strengthen economic growth by boosting potential growth rate and expand virtuous cycle of growth anddistribution based on the ‟Basic Policy on Economic and Fiscal Management and Reform 2019”, the ‟Action Plan of the Growth Strategy”and so on. Moreover, in order to create a society in which everyone plays an active role and feels secure, the Government will establish the socialsecurity system for all generations. The Government extended the duration for which the state of emergency in accordance with the amended Act on Special Measures forPandemic Influenza and New Infectious Diseases Preparedness and Response were being implemented until May 31st, on May 4th. TheGovernment had decided to lift the state of emergency in all prefectures by May 25th. The Government will increase socio-economicactivities step-by-step, while continuing to implement measures to prevent the spread of infections. Under such situation, the Governmentwill implement the ‟Emergency Economic Measures to cope with the Novel Coronavirus” (Cabinet Decision on April 20th) including theFY2020 supplementary budget as soon as possible in order to make effort towards preventing the spread of infections, thoroughly secureemployments, businesses and daily lives, and achieve strong economic recovery and social structural changes after the end of contagion.The Government will submit the FY2020 second supplementary budget (Cabinet Decision on May 27th) to the Diet swiftly and work forearly passage of it. The Bank of Japan decided enhancement of monetary easing further on April 27th and introduction of a new fund-provisioning measureon May 22nd with a view to doing its utmost to support financing mailnly of firms and maintaining stability in financial market. TheGovernment expects the Bank of Japan to achieve the price stability target of two percent in light of economic activity, prices and financialconditions.
<Policy stance>(Monthly Economic Report, May 28, 2020)
4
91.4
889092949698
100102
Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ
2019 20
Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ
2008 09
(2008Ⅰ/2019Ⅲ=100)
This Time
GlobalFinancial
Crisis
Forecast by private agencies
・High 8 average:93.8 (▲13.4%)
・All average:91.6 (▲21.3%)
・Low 8 average:88.9 (▲30.1%).
%2020
Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ
Jan. - Mar. Apr. - Jun. Jul. - Sep. Oct. - Dec. Jan. - Mar.0.6 0.5 0.0 -1.9 -0.9
[2.6] [2.1] [0.0] [-7.3] [-3.4]
(1.5) (0.4) (0.1) (0.8) (0.3) (-2.4) (-0.7)
(1.4) (0.2) (0.1) (0.4) (0.1) (-2.5) (-0.7)
Private Consumption 1.1 0.1 0.1 0.5 0.4 -2.9 -0.7Private Non-ResidentialInvestment 4.3 1.7 -0.5 0.9 0.2 -4.8 -0.5
Private ResidentialInvestment -1.4 -4.9 1.5 -0.3 1.2 -2.5 -4.5
Changes in PrivateInventories(Contributions)
(0.2) (0.0) (0.1) (0.0) (-0.3) (0.0) (-0.0)
(0.1) (0.2) (0.1) (0.4) (0.2) (0.1) (-0.0)
Public Investment 0.5 0.6 2.3 1.7 1.0 0.5 -0.4
(0.5) (-0.1) (0.5) (-0.3) (-0.2) (0.5) (-0.2)
6.4 1.7 -1.8 0.2 -0.6 0.4 -6.03.9 2.5 -4.5 1.8 0.7 -2.4 -4.9
1.1 0.6 0.4 -1.5 -0.8
[4.6] [2.5] [1.6] [-6.0] [-3.1]
<0.1> <-0.2> <0.2> <0.4> <0.6> <1.2> <0.9>
Domestic Demand(Contributions)
2019
Real GDP growth rate1.9 0.3
[at annual rate]
FY2017 FY2018
GDP Deflator<Year on Year>
ExportsImports
Nominal GDPgrowth rate
Private Demand(Contributions)
Public Demand(Contributions)
Net Exports(Contributions)
2.0 0.1[at annual rate]
The real GDP (Gross Domestic Product) for the Jan.-Mar. 2020 period (First preliminary) decreased by0.9%(or at an annualized -3.4%) from the previous quarter.
Domestic demand is weak. Private consumption decreased due to the voluntary restraint from the end ofFebruary, and exports decreased mainly due to the loss of the inbound demand.
The Japanese economy is worsening rapidly in April and May after the declaration of a state ofemergency, and the GDP for the next quarter is expected to be even more severe.
Contribution of real GDP growth rateChanges and contributions to changes in real GDP(seasonally adjusted)
Note: Quarterly data is quarter-to-quarter change. The figures on the lower right in parentheses indicate the annual rate of change from the previous quarter.
Source: Cabinet Office.
s.a.,Q on Q, contribution, %
QuarterYear
QuarterYear
- GDP: Jan. – Mar. 2020 (First Preliminary) -
2.6
2.1 0.0
-7.3 -3.4-12.0
-9.0
-6.0
-3.0
0.0
3.0
6.0
9.0
Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ
2019 2020
Exports
Public demand Private consumption
Private Non-Residential Investment
Imports
Real growth rate
QuarterYear
Comparison of Real GDP with the Global Financial Crisis
5
-9.4
-31.3
-41.3-50
-40
-30
-20
-10
0
3月 4月 5月
y/y
2020 Mar. Apr. May.
- Export & Industrial Production -
Export to China
Goods export is rapidly decreasing. However, export to China increased in April thanks to the strength ofICT-related goods demand. On the other hand, Automobile-related goods export dropped significantly.
Industrial production is decreasing due to weak internal and external demand. The number of motorvehicle production is decreasing substantially. On the other hand, the production of electric parts anddevices are picking up due to strong demand.
Export to Asia
859095
100105110115120125
1 4 7 10 1 4 7 10 1 4 7 10 1 42017 18 19 20
EU
AsiaU.S.
World
s.a., CY2015=100, 3MA
MonthYear
Export volume index by regionApril World Asia U.S. EU
Month to Month -5.7% -1.6% -10.1% -6.9%[Export-share] [53.7%] [19.8%] [9.7%]
80
85
90
95
100
105
110
90
95
100
105
110
115
120
1 4 7 10 1 42019 20
China
NIES(Right scale)
ASEAN
s.a., CY2015=100, 3MA s.a., CY2015=100, 3MA
MonthYear
100
110
120
130
140
100
120
140
160
180
200
220
1 4 7 10 1 4
2019 20
Automobile-related goods (Right scale)
IC
s.a., CY2015=100, 3MA s.a., CY2015=100, 3MA
MonthYear
849096102108114120126
84
88
92
96
100
104
108
1 4 7 10 1 4 7 10 1 4 7 10 1 4
2017 18 19 20
s.a., CY2015=100, 3MA s.a., CY2015=100, 3MA
IIP(total)
Production machinery(Right scale)
Electronic parts and devices(Right scale)
IIP(total, month)
MonthYear
Production by Industry
40
60
80
100
120
1 2 3 4 5 62020
8 9 101112 1 2 3 4 52008 09
CY2015=100
Lehman shock
2020
2020
Forecast
MonthYear
MonthYear
Motor Vehicles Electric parts and devices
actual estimation
Sources: Ministry of Finance, Ministry of Economy, Trade and Industry
Transport equipment(Right scale)
6
1.2
2.1
2.7
7.9
2.6
0 5 10
Retail /Dining out
Finance
service
IT /communication
Total
43.2 25.1
-12.3
-30.1
-12.9
-50 0 50
Instructor /Private Tutor
Transport / driver /delivery
Food & Drink
Factory /Manufacturing
Total
Comparison with the 3rd week of January, % The agreed wage increase rate
Growth of the part-time job offers (April second week)
Employment adjustment subsidy payment status
○ A general retail company A temporarily transfer workers in the apparel sectionto the food section to resolve mismatches.
○A taverns company B signed a seconded contract with food retail company C toaccommodate laid-off employees.
○ The labor union D bridges the personnel demand information among theaffiliated company based unions to resolve mismatches among them.
○ It has become difficult for foreign technical interns scheduled to come to Japanin April, so that workers in the local tourism industry are temporally engagedin the agricultural sector.
Example of intra-company labor movement / inter-company business alliance
MayCumulative number of
applications
Cumulative number of payment decisions
Payment decision
rate(%)
1 5,119 522 10.28 10,534 3,087 29.315 21,592 9,258 42.922 39,185 19,435 49.627 57,750 29,414 50.9
Job openings-to-applicants ratio by sector (the private agency
market (April))
The number of active job openings
- Employment Situation - The total number of active job openings is falling but some types of jobs are increasing. Therefore,
resolving the employment mismatch is important. Some companies and labor unions try to resolvemismatches through labor-transfer through intra- or inter-firm cooperation.
The employment adjustment subsidy is effective to protect employment. About 2% wage growth will be achieved through the annual wage negotiation in spring, which should
support the future income environment
2.071.93
2.43
2.17
1.0
2.0
3.0
2019 2020
Japan Trade Union FederationJapan Business Federation
y/y, %
CY
-11.9-16.3
-21.2-26.3
-35-30-25-20-15-10
-50
2 3 4 5
2020
(y/y, %)
Month
CY
Source: Ministry of Health, Labor and Welfare; DIP Corporation ; PERSOL CAREER CO., LTD ; Japan Trade Union Federation ; Japan Business Federation
Transportation industry,
dispatch of technical personnel
7
Both current and future condition DI (diffusion index) of “Economy Watchers Survey” dropped belowthe lowest recorded at the global financial crisis, suggesting that business is in an extremely severesituation, particularly in non-manufacturing sectors such as food and beverage, and services.
Indices of Tertiary Industry Activity also fell sharply in March due to the voluntary restraint. By industry,the decline was particularly large in the lodging, food and beverage, and transportation industries.
- Business sentiment and Production of Non-Manufacturing Industries-
0
10
20
30
40
50
60
70
2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 2 8 4 .
2007 08 09 10 11 12 13 14 15 16 17 18 19 20
(DI)
<Global Financial Crisis>December 2008Current:19.0(▲4.5) Future :21.3(▲7.0)
April 2020Current: 7.9(▲6.3)Future:16.6(▲2.2)
DI for judgement of current conditions
DI for judgement of future conditions
DI by sector (current conditions)
7.5 10.53.5
-3.1
9.4 9.912.1
8.3 6.3
-100
102030405060
Household activity
-related
(Retail)
(Services)
(Food and beverage)
(Housing)
Corporate activity
-related
(Manufacturing firm
operator,employee)
(Non-m
anufacturing firmoperator,em
ployee)
Employm
ent-related
Feb. 2020→ Mar.→ Apr.
Economy Watchers Survey (April)
(DI)
Indices of Tertiary Industry Activity by Industry(March,2020)
Indices of Tertiary Industry Activity
101.2
96.996
98
100
102
104
106
108
1 4 7 10 1 4 7 10 1 4 7 10 3
2017 18 19 20
(2015=100)
MonthYear
Source: Cabinet Office; Ministry of Economy, Trade and Indusry.
-4.2 -5.2-17.1
-24.4
-46.3-60
-40
-20
0
20
Total
Retail
Transportation
Food and beverage
Lodging
Jan.2020 Feb. Mar.
(m/m, %)
8
Corporate profits are decreasing rapidly, due to the influence of the infectious disease in Q1 2020.Both manufacturing and non-manufacturing firms are in a difficult situation due to the decrease indomestic and overseas sales.
Financial position of SMEs is rapidly deteriorating, while strong public support is beingimplemented. The number of bankruptcies in April was suppressed as a whole, but the number ofinfection related bankruptcies increased.
Financial position of SMEs
The number of bankruptcies The infection related
bankruptcies (cumulative)
743
550600650700750800850
1 3 5 7 9 11 1 3 4
2019 20
cases
monthCY
Ordinary profit of listed companiesQ1 2020:YoY -60.3%
Manufacturing Non-manufacturing
02468
101214
Ⅰ Ⅱ ⅢⅣ Ⅰ Ⅱ ⅢⅣ Ⅰ Ⅱ ⅢⅣ Ⅰ Ⅱ ⅢⅣ Ⅰ Ⅱ ⅢⅣ Ⅰ Ⅱ ⅢⅣ Ⅰ
2014 15 16 17 18 19 20
tril. yen
quarterCY
-58.1 -80-60-40-20
02040
Ⅱ Ⅲ Ⅳ Ⅰ
2019 20
YoY
quarterCY
-62.8 -80-60-40-20
02040
Ⅱ Ⅲ Ⅳ Ⅰ
2019 20
YoY
quarterCY
(~27)
-38
-50
-40
-30
-20
-10
0
2014 15 16 17 18 19 20
DI, upturn – worsened
CY
Apr.
Financial support from public financial institutions (cumulative)
May 7th May 27th
Public financial institutions
4.2tril. yen
6.7tril. yen
Private financial institutions
(interest free loan)
47bln. yen
2.3tril. yen
- Trends in Business Activities-
Source: Tokyo Shoko Research.Source: NIKKEI NEEDS
Source: Tokyo Shoko Research.
1079
1272
25
109
186
0
50
100
150
200
250
Feb. Mar. Apr. May
Preparing forbankruptcybankruptcy
cases
9
Sources: LINE Research .; NOWCAST, INC.; JCB Co., Ltd
Telecommuting and teleworking are expanding widely, in order to achieve the prevention of the spreadof infection, and continuation of business activities simultaneously.
Due to refraining from going out, spending on goods and services is in a severe situation as a whole.Spending at home, such as purchase through e-commerce and digital content distribution, increases.
It is important to resume economic activity by creating a new life-style through the further spread oftelecommuting and teleworking, and e-commerce under taking infection prevention measures in variousindustries.
- Changes in Working-style and Consumption Behavior-
Trends in goods and services spendingStatus of working from home / telework(Ratio of respondents who are implementing)
-5.5
29.2
-46.3
36.1
-50
-40
-30
-20
-10
0
10
20
30
40
50
前 後 前 後 前 後 前 後 前 後
12 1 2 3 4
(%, YoY)
2019~2020
E-commerce
Goods
Services
Digital content distribution
2nd1st 2nd 2nd1st1st 2nd1st 2nd1st Half
Month
5
10
18
32
40
46
49
58
73
35
0 20 40 60 80
Medical
Food and beverage
Transportation /Warehousing
Manufacturing(automobile related)
Real estate business
Wholesale /Trading company
Education / School
Finance / Insurance
IT / communication /Internet related
Total
March 2020 survey(as of March 2)April 2020 survey (as of April 16)
Ratio of respondents who are implementing, %
10
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4
2012 13 14 15 16 17 18 19 20
s.a., tril.yen, 3MA
Month
CY
15
20
25
30
35
40
45
50
0
20
40
60
80
100
120
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 3
2013 14 15 16 17 18 19 20
s.a., ann., thousand units, 3MA
Month
CY
Owner-occupied housing(right scale)
Housing for rent(right scale)
Housing for sale(right scale)
Total
s.a., ann., thousand units, 3MA
Housing investment is in a weak tone.Housing construction starts
33.7
25.1
11.3
0
10
20
30
40
1 4 7 10 1 4 7 10 1 42018 19 20
Month
CY
ten thousand groups
Number of the housing exhibition visitors (couples)
Business investment is in a weak tone recently.
90
95
100
105
110
115
1 4 7 10 1 4 7 10 1 3
2018 19 20
s.a,CY2015=100
Three month average
Month
Month
CY
Capital goods supply
Source: Ministry of Land, Infrastructure, Transport and Tourism. Housing Exhibiter Conference, The Machinami Foundation. Ministry of Economy, Trade and Industry,
East Japan Construction Surety Co.,Ltd.,etc.
Public investment holds firm.Contracted value of public construction
11
0.0
4.3
-2.3 -0.6
-1.6
-0.3
-3.5
1.3
-1.3
1.9 0.4
-15
-10
-5
0
5
10
15To
tal
Construction
Manufacturing
Information and
communication
Transportation / Postal
Wholesale / Retail
Accommodation /
Food and drink services
Life-related service /
Entertainment
Education and
learning support
Medical care, welfare
Other service industry
y/ y contribution, %
0.0
Ttotal cash earnings/Total working hours
Total working hours
Total cash earnings
-0.3 -4.1
0.8
8.5 3.6 2.6
-5.5 -3.8
0.7 0.7
-3.1
-15
-10
-5
0
5
10
15
Total
Construction
Manufacturing
Information and
comm
unication
Transportation / Postal
Wholesale / R
etail
Accom
modation /
Food and drink services
Life-related service / Entertainm
ent
Education and learning support
Medical care, w
elfare
Other service industry
y/ y contribution, %
Total cash earnings
Total cash earnings/Total working hours
Total working hours
Number of employees who laid off work
Total cash earnings (March 2020)
Full-time worker
Part-time workerExpected number of workers for dismissal
(Information through Labor Bureau etc.)
Employment situation: Weakness is increasing due to the influence of the infectious diseases.
Unemployment rate and active job opening-to-applicants ratio
835 2,654
11,058
02,0004,0006,0008,000
10,00012,00014,000
3 4 5
people
2020
Cumulative 14,829 people
(As of May 27)
(Until 27th)CY Month
Source: Ministry of Health, Labor and Welfare; Ministry of Internal Affairs and Communications
1.32
2.6
2.02.22.42.62.83.03.23.43.63.8
0.6
0.8
1.0
1.2
1.4
1.6
1.8
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 4
2014 15 16 17 18 19 20
s.a., ratio (%)
Month
CY
Unemployment rate(right scale)
Active job opening-to-applicants ratio
200
652
100
200
300
400
500
600
700
7 8 9 10 11 12 1 2 3 4
2019 20
s.a., ten thousand people
Month
CY
12
CPI (Consumer Price Index)Producer Price Index/ Services Producer Price Index
Producer prices are declining.
97
98
99
100
101
102
103
104
1 4 7 10 1 4 7 10 1 4 7 10 1 4
2017 18 19 20
Producer Price Index
Services producer price index
CY2015=100
MonthCY
98
99
100
101
102
103
1 4 7 10 1 4 7 10 1 4 7 10 1 42017 18 19 20
s.a., CY2015=100
Core CPI (less fresh food)
Core-core CPI(less fresh food and energy)
CPI
MonthCY
Consumer prices are flat.
Note: CPIs are estimates by the Cabinet Office, which exclude the direct effects of the consumption tax increase and free early childhood education and nurseries. Drops in April 2020 include temporary impacts caused by one-off institutional factors such as the free higher education program and reduction of automobile insurance charges. Producer price index and services producer price index exclude consumption tax.
Source: Bank of Japan; Ministry of Internal Affairs and Communications; Cabinet Office
Including temporary impacts caused by one-off institutional
factors(about -0.2%)
13