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Japan Times
41 minutes ago
- Business
- Japan Times
Living conditions index hits lowest level in 15 years in Japan
The proportion of people in Japan who think their living conditions are more comfortable than a year before has fallen to the lowest level in over 15 years, according to a Bank of Japan quarterly survey for June. The diffusion index on living conditions, or the percentage of respondents who said their living conditions improved from a year before minus that of those who said the opposite stood at minus 57.2, the worst level since the September 2009 survey. The figure worsened from minus 52.0 in the previous March survey, according to the latest survey released Monday. The share of respondents who said they have become worse off came to 61.0%, up 5.1 percentage points from the previous survey. By contrast, the proportion of people who said they have become better off fell by 0.1 point to 3.8%. Among respondents becoming worse off, the proportion of those who cited rising prices as a reason behind the deterioration reached 93.7%. The survey also showed that the share of respondents who think that economic conditions worsened from a year before stood at 70.5%. Asked how much prices would increase in a year, respondents answered 12.8%, on average, up from 12.2% in the previous survey and hitting the highest level since comparable data became available in September 2006. The share of respondents who said prices rose in the country from a year before came to 96.1%, almost unchanged from the previous survey. The latest survey was conducted between May 1 and June 3, covering people age 20 or over across the country. The June survey was the first since the administration of U.S. President Donald Trump imposed additional tariffs on steel, aluminum and automobiles as well as some "reciprocal" tariffs. "We cannot say anything for sure" about the potential impact from the tariffs, a BOJ official said.
Reuters
3 hours ago
- Business
- Reuters
Japan manufacturers' sentiment improves in July despite tariff woes: Reuters Tankan poll
TOKYO, July 16 (Reuters) - Japanese manufacturers' business confidence improved slightly in July and is expected to strengthen further in the coming months despite ongoing concerns about U.S. tariffs, thanks to recovery in the semiconductor sector, a Reuters Tankan poll showed. The monthly poll, which tracks the Bank of Japan's quarterly tankan business survey, showed the manufacturers' sentiment index rising to plus 7 in July from plus 6 in June, while the service-sector index remained unchanged at plus 30 for the third consecutive month. Manufacturers expect sentiment to improve further to plus 8 by October, while service firms forecast their outlook will soften to plus 27, according to the July 2-11 survey of 497 major non-financial companies, of which 241 responded on condition of anonymity. Among manufacturers, the electronics machinery sector index improved to minus 4 in July from minus 16 in June, and chemicals rose to plus 18 from plus 12, with some citing the ameliorating chip demand. "There's brightness visible in some parts of the semiconductor industry, though other areas remain stagnant," a rubber maker manager said. In contrast, the transport machinery sector, which includes Japan's crucial car industry, saw its index falling to plus 9 from plus 20 in June, with some managers referring to the impact of U.S. 25% auto tariffs on export volumes and costs. Although overall sentiment remains in positive territory, manufacturers continue to monitor potential risks from U.S. trade policies. "While there are predictions among our users that the impact of Trump's tariffs can be negative, for now we're in a wait-and-see situation," a paper and pulp industry manager said, highlighting the prevailing uncertainty. Some expressed concern about investment appetite. "Our customers are becoming cautious about capital expenditure due to economic slowdown caused by U.S. tariffs and uncertainty in the Middle East situation," one machinery maker manager noted. The service sector was mixed overall, with wholesalers' confidence improving but the sentiment of property, retail, IT and transport sectors down from June. A retail company manager noted an ambivalent mood, with supermarkets benefiting from higher customer spending on successful price hikes, while department stores suffered from a decline in sales compared to last year's surge in inbound tourism. The poll results come as Japan's export-dependent economy faces headwinds from global trade tensions. Japan's economy shrank in the first quarter on lukewarm consumption. Exports fell in May for the first time in eight months, stoking fears of a recession, defined as two straight quarters of contraction.
Reuters
3 hours ago
- Business
- Reuters
Small but rising Japanese opposition party warns against near-term BOJ rate hike
TOKYO, July 16 (Reuters) - The Bank of Japan should hold off raising interest rates until the economy achieves a stronger recovery, Sohei Kamiya, head of the small opposition party Sanseito said ahead of an upper house election, warning against a premature hike in borrowing costs. "Corporate bankruptcy cases aren't declining and real wages aren't necessarily rising yet. The economy doesn't appear to be heading toward strong growth," Kamiya told Reuters on Tuesday. "The BOJ should spend more time scrutinising the economy and be cautious about raising interest rates," he said, when asked whether the central bank should hold off hiking rates for the rest of this year. The remarks highlight political headwinds the BOJ could face after an upper house election on Sunday in proceeding with its plan to raise interest rates, still at 0.5%, and normalise monetary policy. Recent media polls have shown Japan's ruling coalition could lose its majority in the upper house, drawing attention to opposition parties like Sanseito that may influence government policies depending on the outcome of the election. A small populist party founded in 2020, Sanseito has seen public support rise sharply, with daily newspaper Yomiuri predicting on Wednesday the party could win more than 10 seats in the upper house, up from just two currently. Japan's upper house has 248 seats, of which 125 are for grabs in Sunday's election. Depending on the outcome of the election, Sanseito may emerge as the third or fourth largest opposition party in the chamber and hold a key role in passing through legislation. Prime Minister Shigeru Ishiba's ruling coalition has given a quite nod to gradual BOJ rate hikes, as has the biggest opposition Constitutional Democratic Party of Japan. Smaller opposition forces like the Democratic Party for the People have warned against near-term hikes in borrowing costs. Sanseito's Kamiya said he had "absolutely no plan" of joining the ruling coalition after the election, saying his party must focus on solidifying its base to become a stronger force in parliament in the future. "When the party wins, say, 40 to 50 seats, that's when we'd like to strive to join a coalition and become a ruling party," he added. Kamiya also said Japan should cut the sales tax rate to cushion the economic blow from rising living costs, but do so gradually to avoid triggering a bond market selloff.
Free Malaysia Today
a day ago
- Business
- Free Malaysia Today
Japan election could further hamper BOJ's drive to raise rates
Japan's Prime Minister Shigeru Ishiba has supported the Bank of Japan's policy of lifting interest rates from near zero. (Kyodo News/AP pic) TOKYO : Japan's central bank may face political pressure to keep interest rates low for longer than it wants, as opposition parties favouring tax cuts and loose monetary policy are expected to gain influence after a July 20 election. Opinion surveys suggest prime minister Shigeru Ishiba's coalition may lose its majority in the upper house of parliament, forcing it to court an array of smaller parties pushing for easier fiscal and monetary policy. The governing bloc led by Ishiba's Liberal Democratic Party is already a minority in the more powerful lower house, so a stalemate in both chambers could give opposition parties outsized influence in policy decisions. Ishiba has supported the Bank of Japan's policy of gradually lifting interest rates from near zero as inflation picks up in the world's fourth-biggest economy while trying to curb the biggest government debt burden in the industrial world. But if opposition groups gain traction with their pressure on the BOJ to avoid rate hikes and for the government to cut the sales tax, that could boost bond yields and complicate the bank's efforts to normalise monetary policy, some analysts say. The BOJ declined to comment on the potential impact of the election on monetary policy. 'There's a 50% chance the ruling coalition could lose its majority in the upper house, which could lead to increased debate about cutting Japan's consumption tax rate,' said Daiju Aoki, chief Japan economist at UBS SuMi Trust Wealth Management. 'That would push up Japan's long-term interest rates by stoking concern over the country's finances,' he said. Debt set to rise Sohei Kamiya, head of the upstart right-wing party Sanseito, has criticised the BOJ for slowing its bond buying when the economy remains weak. 'The ministry of finance and BOJ should work hand in hand in taking aggressive steps for a few years to boost domestic demand,' Kamiya told a press conference this month. Another small group, the Japan Innovation Party, wants the BOJ to go slow in raising rates to restrain the cost of interest on the government's debt. Yuichiro Tamaki, head of the Democratic Party for the People, a party seen as a strong candidate to join Ishiba's coalition, has urged the BOJ to loosen, not tighten, monetary policy to keep the yen from rising and hurting the export-reliant economy. Even if the coalition keeps its majority, Ishiba may need to ditch his hawkish fiscal tilt and boost spending to cushion the economic blow from threatened US tariffs and rising costs of living. 'There's a good chance the government will compile an extra budget to fund another spending package to the tune of ¥5 trillion to ¥10 trillion (US$35 billion-US$70 billion). That would push up bond yields further,' said former BOJ board member Makoto Sakurai, who expects the central bank to avoid raising rates at least until March. Japan's public debt is equal to 250% of gross domestic product, far above that of Greece at 165%. The government spends nearly a quarter of its budget to finance a ¥1,164 trillion (US$7.9 trillion) debt pile, with the cost expected to rise steadily as the BOJ exits zero-interest rates. 'Need to brace' To be sure, inflation – above the BOJ's 2% target for three years – boosts nominal tax revenues, which can help the government avoid ramping up bond issuance to fund further spending. But cutting the sales tax rate, an idea Ishiba has ruled out for now, would leave a bigger hole in Japan's finances. Once a fringe idea, cutting the 10% sales tax is now among Japan's most popular economic policy proposals. In a recent poll by the Asahi newspaper, 68% of voters thought a sales tax cut was the best way to cushion the blow from rising living costs, compared with 18% who preferred cash payouts. If the sales tax is on the chopping block after the election, it is the kind of vital issue that could prod Ishiba to dissolve the lower house and call a snap election – a move that would prolong political uncertainty. If Ishiba were to step down, an LDP race to replace him could revive market attention to candidates like Sanae Takaichi, an advocate of aggressive monetary easing whom Ishiba narrowly beat in the party's leadership race last year. Unlike Ishiba, who gave a quiet nod to BOJ policy normalisation, Takaichi has said it would be 'stupid' for the central bank to raise rates. All this would mean the BOJ's rate hikes, already on pause due to uncertainty over US tariffs, could be put on hold even longer. 'We may need to brace for a long period of political uncertainty and market volatility,' said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities. 'That would just give the BOJ another reason to sit on the sidelines and wait for the dust to settle.'
a day ago
- Business
Living Conditions Index Hits Lowest Level in 15 Yrs in Japan
News from Japan Economy Jul 15, 2025 13:35 (JST) Tokyo, July 15 (Jiji Press)--The proportion of people in Japan who think that their living conditions are more comfortable than a year before has fallen to the lowest level in over 15 years, according to a Bank of Japan quarterly survey for June. The diffusion index on living conditions, or the percentage of respondents who said their living conditions improved from a year before minus that of those who said the opposite stood at minus 57.2, the worst level since the September 2009 survey. The figure worsened from minus 52.0 in the previous March survey, according to the latest survey released Monday. The share of respondents who said they have become worse off came to 61.0 pct, up 5.1 percentage points from the previous survey. By contrast, the proportion of people who said they have become better off fell by 0.1 point to 3.8 pct. [Copyright The Jiji Press, Ltd.] Jiji Press
