By Max Sato
(MaceNews) – Consumer and business confidence in Japan is mixed due to pandemic lifestyles, while voter support for Prime Minister Yoshihide Suga continues to slide on public disappointment with what critics call a behind-the-curve policy response and complacency among ruling-camp politicians.
Demand for takeout food, groceries and household appliances and furniture remains strong while sales in the tourism and transportation industries as well as at restaurants, bars and retail stores in general are depressed.
The monthly Economy Watchers Survey released by the Cabinet Office on Monday showed a mixed picture of how people in various industries were feeling about the new reality of the pandemic in terms of consumption and business patterns. Sentiment was gloomier overall on the current situation but largely hopeful for a pickup in the months ahead.
The Watchers sentiment index for Japan’s current economic climate slumped 3.1 points to an eight-month low of 31.2 in January on a seasonally adjusted basis, marking the third straight month of decline amid restricted economic activity during the pandemic, and slipping from an over six-year high of 53.0 hit in October, when optimism over containing the virus had emerged.
Pinning Hopes on Reopening
In contrast, the Watchers outlook index, which shows sentiment about the situation two to three months ahead, posted the second consecutive monthly gain, up 3.8 points at 39.9 in January (still well below October’s 47.7), on hopes that social distancing and vaccination would eventually lead to fewer coronavirus cases and a gradual easing of the restrictions on busines hours and traveling.
“Since the state of emergency was declared (in early January for some provinces), the number of customers has dropped sharply in the morning and after 18:00,” a department store manager in western Japan said, in the survey conducted between Jan. 25 and Jan. 31. “As for the whole month, the number of visitors to our store is about 40% of the previous year.”
A taxi driver in southern Japan said slower business during the state of emergency has forced his employer to suspend night-time operations and that day-time business, sporadic and only for commuting, is about half the level seen in normal years.
A food manufacturer in north central Japan said demand by households has been good in the new year but that eating at restaurants remains sharply below year-earlier levels.
On the upside, a home appliance store manager noted that unit prices for white goods (washers, dryers, refrigerators, dishwashers, microwave ovens, air conditioners, etc.) have been rising due to strong demand as more people are working from home and cooking at home, which has also helped push up prices for entertainment consumer electronics.
Looking ahead, a department store in southern Kanto, which includes Tokyo, expects shoppers to return gradually when the government lifts the state of emergency. It said the start of vaccination (planned for later this month) should also support business.
But a theme park operator in northern Kanto reported that uncertainty over when the government can lift its emergency measures had led to cancellations of student group tours in February and March.
The survey indicates whether respondents with jobs most sensitive to economic conditions – taxi and truck drivers, department-store sales staff and restaurant and shop owners — believe economic conditions have improved or worsened from three months earlier. An index above 50 suggests people are positive.
Consumer Confidence Backslides
The Watchers survey followed the release last month of the monthly Consumer Confidence Survey of households with two or more people conducted on Jan. 15 by the Cabinet Office.
Japan’s consumer confidence index fell 2.2 points to a five-month low of 29.6 in January, down for the second straight month on a seasonally adjusted basis, prompting the government to downgrade its assessment, saying consumer sentiment had “a weak tone,” compared to its previous view that it was “marking time.”
Consumers were more pessimistic about all of the four key elements that
affect their sentiment — overall economic well-being, income gains, job prospects and whether it would be a good time to buy durable goods over the next six months.
The index on asset prices, which is not one of the sub-indexes used to
calculate overall consumer confidence, also recorded the second straight month of decline, down 0.9 point at 34.7 in January, despite generally higher stock prices in Japan between the latest survey date of Jan. 15 and the previous one on Dec. 15.
The survey also showed that slightly more people thought prices for daily necessities would fall a year from now and fewer respondents believed prices would rise, indicating a bearish outlook overall for economic recovery.
Japan has been trying to strike a delicate balance between limiting economic activity to slow the spread of COVID-19 and allowing as many businesses as possible to stay open with safety measures, but the government has never imposed strict lockdowns on cities or regions.
Opposition party lawmakers and some economists have been saying the government response was too slow, describing the campaign launched in July to support the tourism industry with subsidized travel discounts as a disaster. A renewed spike in new coronavirus cases forced the government to suspend the program in late November.
Voter Support for Suga Sliding
A weekend telephone poll of people aged 18 and older by the public broadcaster NHK showed the disapproval rate for the Suga cabinet had topped the approval rate for a second straight month. A total of 1,249 people, or 58%, responded.
The approval rating dipped 2 percentage points to 38% from January while the disapproval rating inched up 3 points to 44%, in sharp contrast to high expectations for Suga at the start of his term in September, when 62% supported his government and only 13% opposed, according to NHK.
Of those who do not support the Suga government, 34% said it is not capable of getting things done, 33% said they don’t have high hopes for its policies and 16% said they “cannot trust” Suga.
Suga has disappointed friends and foes with his short and unengaging responses during the question-and-answer period in parliament, which is currently in a 150-day ordinary session until June 16 to debate the fiscal 2021 budget and other key issues.
He is also viewed as cold-hearted, particularly among people struggling to stay above the poverty line amid job losses and pay cuts, with his basic policy urging that people help themselves or seek community support before applying to the government for welfare.
Asked about the government’s response to the virus, only 4% said it is doing a very good job and 40% said it is doing fairly well, while 39% said it is not doing very well and 14 percent said it is doing badly.
The latest polls by other news media have shown similar results.
The approval rating for the Suga cabinet was little changed at 43% in a Nikkei newspaper/TV Tokyo weekend opinion poll conducted from Jan. 29 to Jan. 31. The telephone survey received 1,014 responses from people aged 18 and older, with a response rate of 46.8%.
Support was one percentage point higher than in the previous poll in December, but the disapproval rate increased 2 points to 50%, exceeding the approval rate for the second straight month. Suga’s approval rating has now plunged from 74% — one of the highest in history – scored when he replaced Shinzo Abe due to Abe’s poor health, the Nikkei said.
On Jan. 7, the government declared a state of emergency for Tokyo and 10 other prefectures. But 79% of respondents in the Nikkei survey said it came “too late,” with only 14% saying the timing was appropriate.
The government has extended its emergency measures by one month until early March for Tokyo and nine other jurisdictions (one excluded from the original group of 11), urging bars and restaurants to close by 8 p.m., and asking people to stay home as much as possible and limit shopping to essential items. Companies have been told to help reduce the use of public transportation by allowing most of their employees to work from home.
Owners of bars and restaurants have complained that government compensation is not enough to cover their operating costs, with some openly defying the call for shorter business hours.
Public anger also erupted on news that a senior LDP lawmaker visited two night clubs in Tokyo’s posh Ginza district after dining at an Italian restaurant last month and that a lawmaker from the ruling coalition’s junior partner Komeito spent time at a high-end night club in Ginza until late. Both men apologized for their behavior.
Suga is serving the remainder of Abe’s third three-year term as the LDP leader, which ends in September. The focus is already on who will replace him and when he will call a general election, which must be held 30 days before the four-year term of the lower house of parliament expires on Oct. 21.
Asked who the next prime minister should be, 25% of respondents in the Nikkei survey named Taro Kono, administrative and regulatory reform minister who also oversees COVID-19 vaccine distribution.
Kono, 58, is fluent in English and held foreign and defense portfolios in Abe’s cabinet. He comes from a political family. His father Yohei Kono served as house speaker, foreign minister and LDP president, and his grandfather Ichiro Kono held various cabinet posts in the 1950s and 1960s.
Former LDP Secretary-General and Defense Minister Shigeru Ishiba, 64, who ran against Suga, 72, in last year’s LDP race to succeed Abe, came in second at 16%. Environment Minister Shinjiro Koizumi, 39, son of former Prime Minister Junichiro Koizumi, followed at 13%.
The opposition parties remain fragmented, showing no signs they can work out their differences and form a united front to challenge the LDP’s eight-year rule.