GENERAL SURVEY

Vol.32-No.05 May 1,1993

Economic Indicators Vary-Economy Bottoming Out?-

Among other important indicators, the Short-Term Economic Survey of Enterprises in Japan (Tankan) for February, published on March 3 by the Bank of Japan (BOJ), an index for judging future business trends, registered a diff;usion index or DI of -49. The DI is calculated by subtracting the number of major manufacturing fi;rms replying business conditions are "bad" from those answering "good." The fi;gure was fi;ve points down from that of the previous survey conducted in November 1992. Plant and equipment investment programs for fi;scal 1993 in major corporations in all industries are also expected to drop 4.2 percent from the expected actual results for 1992, thus indicating that the economic downturn will beprolonged. On March 1, the Management and Coordination Agency (MCA) unveiled results of its 1992 Family Income and Expenditure Survey. According to the report, Japan's living expenditures by all households showed a 2.0 percent year-on-year rise and a real 0.4 percent advance for a monthly average of 330,000yen. The fi;gure was the lowest rate of growth posted in the eight years since 1985. MCA concludes that "Collapse of the bubble economy has also aff;ected personal spending."

On the other hand, the survey results suggest that a bottming out of the economy may have begun to take place. According to MCA's Labor Force Survey released on March 2, the unemployment rate declined 0.1 percentage point from the preceding month to a seasonally adjusted 2.3 percent. In the previous month, the fi;gure had reached the highest level since 1989.

Meanwhile, the Ministry of Labour said on the same day that the ratio of job openings-to-job seekers in January edged up 0.01 point from December to a seasonally adjusted 0.93. It was the fi;rst such rise in 22 months.

Mining production trends in February, released on March 26 by Ministry of International Trade and Industry, showed that both production and shipments turned positive, relative to the previous month, for the fi;rst time in fi;ve months. Also, auto sales, which have continued to slump, turned upward in March, for the fi;rst time in nine months. Some analysts view this as a temporary phenomenon ahead of the-end-of-the-fi;scal-year settlement season. Furthermore, the Economic Planning Agency is cautious, noting that "it is too early to say that the economy has bottomed out." But public works projects incorporated in the ecomonic stimulus package launched in the summer of 1992 have begun to kick into high gear. In coming months, the Japanese economy is expected to continue its mild recovery if the new stimulus package announced in April successfully overcomes the eff;ects of the rising yen and a plunge in land prices.

At a March 7 press conference, BOJ Governor Mieno pointed out "Though the economy is still mired in a slump in some regions, industrial circles see supply adjustments and rising stock prices as favorable." He thus expressed the view that "changes are certainly taking place in business attitudes."

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