Thursday, April 02, 2009

Japan:Still in Cold Winter

We have a useful data set to look at our economy, TANKAN, a diffusion index of "Favorable" minus "Unfavorable", %points.

This index is very clear and easy to understand and may have a great impact on the coming economic event and policy in Japan. Here's the part of it:

[Business Conditions] Dec. 2008, March 2009

[Large Enterprises]
Manufacturing -24, -58
Nonmanufacturing - 9, -31

[Medium-sized Enterprises]
Manufacturing -24 , -57
Nonmanufacturing -21, -37

[Small Enterprises]
Manufacturing -29, -57
Nonmanufacturing -29, -42

[All Enterprises]
All industries -24, -46

We can see large enterprises of manufacturing worst in the above index and they have the most sever sufferings of all.

This is because they much depend on foreign demands and so are very weak at the time of world slump as we have today.

Large enterprises have low sales and thus low profit, which brings much lower sales and profit of smaller enterprises(because they are usually given jobs from large ones) and thus lower income and consumption as a whole.

Companies cut the prices and wages more, and workers(as a result, consumers) spend less further. We are now at the edge of serious deflationary recession.

1 comment:

Anonymous said...

It was extremely interesting for me to read the article. Thanks for it. I like such themes and anything connected to them. I would like to read more on that blog soon.