Japanese Economy in 2006 and Beyond: Despite Slow Growth, Record Postwar Expansion Achieved

06-ERC 70L-001AA 17 Japanese Economy in 2006 and Beyond: Despite Slow Growth, Record Postwar Expansion Achieved February 2007 Japanese Economy Division, Economic Research Department JETRO Contents Overview .i General Indicators: Longest Economic Expansion in Postwar Japan A Corporate Activity Robust, Although Growth Slows in 2006 Second Half B Characteristics of Current Economic Growth C Issues and Outlook for Japanese Economy Trade and Direct Investment: Ties with Emerging Markets Deepen 13 A Exports and Imports Reach High Levels 13 B Trade Trends by Geographic Area (Jan.–Nov.) 13 C Trade by Product 16 D International Trade Balance 20 E Expectations for 2007 20 F Foreign Direct Investment 21 Production: Mining and Manufacturing Output Remain High 27 A Expansion Continues Despite Uneven Pace 27 B Rising Inventories in Electronic Components and Devices 31 C Mild Growth to Continue in 2007 32 Corporate Sector: Capital Expenditure Plans Still Solid 33 A Corporate Earnings Continue Growing 33 B Capital Expenditure Maintains Steady Growth 35 C Slower but Sustained Growth in 2007 38 Employment: Wages Stagnant but Employment Improves 42 A Employment and Wage Trends in 2006 42 B Gearing Up For Mass Retirements by Baby Boomers 45 C Outlook for 2007 47 Personal Consumption: Spending Remains at a Standstill 50 A Trends in 2006 50 B Growing Expectations for Spending by Baby Boomers 53 C Outlook for 2007 54 Prices: End to Deflation Put on Hold 57 A Consumer Prices Maintain Slight Upward Movement 57 B Corporate Goods Prices Peak 58 C Outlook for 2007: End of Deflation 59 Finance: Financial Environment Returns to Normality 62 A BOJ Tightens Money Policy 62 B Demand for Funds Recovers, albeit Slowly 64 C Banking Industry Trends 68 D Stock, Securities and Foreign Exchange 70 E Increased Polarization of Real Estate Market 73 F Key Points to Watch 74 Columns Column 11 Column 17 Column 26 Column 40 Column 49 Column 56 Column 61 Column 67 Column 75 Overview General Indicators: Japan's Longest Economic Expansion in the Postwar Period The Japanese economy achieved high growth rates in 2006, particularly in the corporate sector in the first half of the year The middle of 2006 brought a slowdown, especially in consumer spending In general, however, corporate performance held steady, labor supply was tight and the economy overall did not slow significantly The economic growth phase that began in January 2002 is virtually certain to be statistically verified as having marked its 58th consecutive month in November 2006, making it the longest period of growth in postwar Japan Although favorable results have been seen in the corporate sector, there was only mild improvement in wages and consumer spending, so the pace of recovery was slower than in previous phases of growth The United States economy is forecast to slow down in 2007 Meanwhile, Japanese companies remain reluctant to increase wages, so the Japanese economy is also expected to lose momentum The labor supply will tighten as baby boomers retire en masse It is unlikely that the economic recovery will stall due to slowed consumer spending Stable economic growth is expected, although actual results could be hurt by a potential downturn in the United States economy, crude oil prices rising again, an increase in the fiscal deficit or political events that could negatively affect consumer confidence Trade and Direct Investment: Deeper Ties with Emerging Markets Exports increased thanks to a weaker yen and favorable conditions in the global economy Imports also expanded as the Japanese economy recovered and crude oil import prices stayed high Despite potential risks, conditions remain favorable in China and the rest of East Asia, which together accounted for 45.7% of total Japanese exports Exports to this region should remain brisk in 2007 Crude oil prices appear to have stabilized since October 2006, so import growth is expected to decline Foreign direct investment in January to September 2006 confirmed that investment in China continued to slow down, as in 2005 Japanese corporations, aware of the risks of intellectual property rights violations in China, partly shifted operations to the emerging markets of India, Russia and Vietnam Outward M&A included several megadeals as Japanese corporations sought to expand their core businesses Inbound FDI was boosted by major increases in funding, resulting in the largest net outflow since such statistics were first complied in 1996 Production: Mining and Manufacturing Production Sustains High Levels Mining and manufacturing output maintained an overall upward trend in 2006, sustained by a steady recovery in the materials industries Robust increases in both internal and external demand for products such as transport equipment and electronic components and devices led to high growth in shipments overall, although trends varied among industries Stock buildups of certain key products, such as mobile phones and game equipment in the electronic components and devices industry, put sporadic pressure on the mining and manufacturing sector to reduce inventories But the buildups were considered transitory, so mining and manufacturing is forecast to enjoy moderate growth sustained by brisk internal and external demand in 2007 i Corporate Sector: Appetite for Capital Investment Remains Healthy Corporate profits continued growing, buoyed by an economic climate of high production and stabilized oil prices Increased profits were seen across a wide range of industries and firms (in terms of company size), which helped to boost capital investment The scope of capital investment expanded due to efforts to raise global competitiveness, centering on processing industries, and the elimination of perceived overcapacity among even small and midsized enterprises Capital investment could see a reactionary decline in 2007, but it is still expected to continue growing because of new overseas demand being developed by Japanese companies seeking to reinforce their revenue bases Employment: Wages Stagnant but Employment Improves Employment improved in 2006 as the labor supply tightened due to the start of mass retirements by baby boomers and corporate performance rose steadily Corporate performance is forecast to remain firm, which would help to fuel a moderate improvement in employment However, with non-regular workers now accounting for 30% of all employees, this could lead to new problems in the labor market, including broader inequalities in incomes Wages tended to remain static in 2006 Earnings were not passed along to employees due to corporate reluctance to increase wages A tightening labor supply, however, is exerting upward pressure on wages, which are expected to increase moderately in 2007 Personal Consumption: Spending Remains at a Standstill Personal consumption (consumer spending) was stagnant in 2006, influenced by factors such as a long rainy season and sluggish sales of winter clothing due to unusually warm weather Spending was hampered by sluggish wage increases Although consumers remain uncertain about prospects due to the scheduled elimination of tax breaks and increases in their social security burden, wages are expected to rise as the labor supply continues to tighten This, along with retirement payments to baby boomers retiring en masse, should stimulate a moderate increase in personal consumption in 2007 Prices: Move out of Deflation Comes to Standstill Consumer prices turned moderately upward in 2006 However, statistical revisions to key indices and increasingly severe price competition in digital products negated any clear upward trend in prices, so the government did not officially declare an end to Japan’s chronic deflation But these special factors notwithstanding, the elimination of domestic oversupply and, on the demand side, personal consumption will be pushed upward by moderate wage increases As a result, the demand/supply gap is expected to tighten and prices are likely to experience upward pressure in 2007 Finance: Financial Environment Improves The Bank of Japan lifted its easy money policy for the first time in five years in March 2006, and then ended Japan’s era of ultra-low interest rates by raising its bank lending rate in July Although further increases were expected during the year, they were postponed until January 2007 The impact of the BoJ’s tightened money policy was limited to commercial and home loans Going forward, however, intensified upward pressure on rates should affect households and companies, and beyond them government finances The financial climate moved steadily toward normality, particularly in banking where non-performing loans were largely eliminated The BoJ’s timing for additional rate increases must ii be watched, as a distinctly tighter stance is envisioned in the latter half of 2007, when the Japanese and U.S economies are expected to show clear signs of stable growth and rising prices iii General Indicators: Longest Economic Expansion in Postwar Japan A Corporate Activity Robust, Although Growth Slows in 2006 Second Half The Japanese economy enjoyed stable growth led by capital expenditure in 2006 The underlying positive tone of 2005 extended into first half of the year, with high growth primarily in the corporate sector From midyear, however, the economy began to slow, particularly in consumer spending The GDP rose more than two percent in the first quarter, propelled by consumer spending, capital expenditure and other segments of the private sector In the second quarter, growth slowed to 0.3% over the previous quarter (1.1% annualized) due to weakened demand from the public sector and efforts to cut inventories Although the GDP in the third quarter was up just 0.2% (0.8% annualized), it was the seventh consecutive quarter of positive growth, so the economy continued to avoid any significant decline (figs 1-1 & 1-2) Consumer spending turned pessimistic and declined 0.9% from the second quarter The decline, although due to temporary factors such as inclement weather, also reflected the fact that improved jobs and stronger corporate results had not translated into increased incomes because companies kept a lid on personnel costs Capital expenditure grew 1.5% The third-quarter GDP was also supported by external demand as exports to the U.S and East Asia rose Imports were sluggish After years of chronic deflation, the consumer price index (excluding fresh foods, 2000 [pre-revision] baseline) rose 0.5% year on year in January, which followed 0.1% growth in each of the two previous months Thereafter, the index grew throughout much of the year, but the GDP deflator and special factors influencing CPI growth remained negative, so the government did not officially announce the end of deflation (Fig 1-3) Fig 1-1 Contributions to GDP Growth by Calendar Year and Quarter Calendar Year (% YoY) 8.0 6.0 4.0 2.0 Quarter 6.8 5.1 3.8 3.0 Other (annual rate, % QoQ) Public sector demand Net exports 5.3 5.2 Private sector capital investments 3.4 3.2 Private sector final consumption expenditure 2.8 2.1 2.7 3.4 GDP 1.10.8 2.7 1.6 1.0 2.7 2.9 0.21.1 2.0 1.9 0.3 1.4 0.2 0.0 -2.0 13 46 10 -9 06 -12 /1 -3 46 79 05 / 85 86 87 88 89 90 91 92 93 94 95 96 97 98 20 00 01 02 03 04 05 -4.0 -0.1 -2.0 Real values, derived from a fixed-base estimates formula up to 1994, and a chain-weighted index formula from 1995 “Other” includes private-sector inventory growth (decrease) and private housing Sources: Economic and Social Research Institute, Cabinet Office and Government of Japan Fig 1-2 GDP Growth Trends (%) Real GDP (annual rate) Private Housing sector final investment Private corporate Private Net exports sector inventories Exports Imports Public sector demand Private sector demand Nominal GDP GDP deflator Calendar year (YoY) 2000 2.9 2001 0.2 2002 0.3 2003 1.4 2004 2.7 2005 1.9 Fiscal year (YoY) - 0.7 1.6 1.1 0.4 1.6 1.6 0.9 -5.3 -4.0 -1.0 1.9 -1.3 7.5 1.3 -5.2 4.4 5.6 6.6 0.9 -0.2 -0.3 0.2 0.3 -0.1 0.5 -0.8 0.7 0.7 0.8 0.3 12.7 -6.9 7.5 9.2 13.9 7.0 9.2 0.6 0.9 3.9 8.1 5.8 0.1 1.1 0.4 -1.1 -0.6 0.1 3.2 1.0 -0.7 1.4 2.8 2.2 1.1 -1.0 -1.3 -0.2 1.6 0.6 -1.7 -1.2 -1.5 -1.6 -1.1 -1.3 2000 2.6 2001 -0.8 2002 1.1 2003 2.1 2004 2.0 2005 2.4 Quarter (QoQ) - 0.7 1.4 1.2 0.6 1.3 1.9 -0.1 -7.7 -2.2 -0.2 1.7 -1.0 7.2 -2.4 -2.9 6.1 6.2 5.8 0.8 -0.5 0.1 0.3 0.1 -0.1 0.1 -0.5 0.7 0.8 0.5 0.5 9.5 -7.9 11.5 9.8 11.4 9.0 9.7 -3.4 4.8 3.0 8.4 6.0 0.7 0.6 0.1 -0.5 -1.5 0.4 3.0 -0.5 0.4 1.9 2.4 2.4 0.9 -2.1 -0.8 0.8 0.9 1.0 -1.6 -1.3 -1.8 -1.3 -1.0 -1.3 2005/1-3 4-6 7-9 10-12 0.8 0.8 0.7 0.5 3.4 3.2 2.8 2.1 0.8 0.9 0.6 0.5 -1.5 -1.6 1.0 1.5 2.5 1.6 0.9 -0.8 -0.1 0.1 -0.2 0.0 0.0 0.3 0.0 0.6 -0.3 3.4 3.0 3.8 -0.3 1.2 3.5 -0.2 0.8 -1.0 1.9 -1.3 0.9 1.0 0.4 0.3 0.1 0.4 0.1 0.4 -1.0 -1.0 -1.4 -1.6 2006/1-3 4-6 7-9 0.7 0.3 0.2 2.7 1.1 0.8 -0.1 0.5 -0.9 0.9 -2.1 -0.3 3.6 3.2 1.5 0.2 -0.2 0.2 0.1 -0.1 0.4 2.3 0.7 2.5 1.9 1.3 -0.5 -0.6 -0.9 -0.4 0.9 0.7 -0.2 0.4 0.0 0.0 -1.3 -1.1 -0.7 Levels of contribution to overall GDP by private-sector inventories and net exports Quarterly GDP deflator figures show annual change Sources: Economic and Social Research Institute, Cabinet Office and Government of Japan 06/01 05/01 04/01 03/01 02/01 01/01 00/01 99/01 98/01 97/01 96/01 95/01 Fig 1-3 Consumer and Wholesale Price Trends The current economic expansion, which began in January (% Y oY ) (% Y oY ) 8.0 40.0 2002 and reached 58 months as of C orp orate goods (sem i-finished, right ax is) C orp orate goods (finished goods) November 2006, almost certainly C onsum er Price Index (ex cep t fresh foods) 6.0 30.0 will be declared the longest postwar G D P deflator C orp orate goods (raw m aterials, right ax is) growth period , surpassing the 4.0 20.0 57-month Izanagi boom in 1965–1970 The economic 2.0 10.0 sentiment diffusion index (DI, 0.0 0.0 coincident indicators), which shows the economy’s current direction, fell -2.0 -10.0 below the 50 midpoint in both February and March, but then -4.0 -20.0 trended above 50 for the rest of the -6.0 -30.0 year The coincident indicators, which indicate the value of the economy, rose to 113.0 in October and thereby bested the previous Impact of sales tax increase not reflected in corporate goods index or CPI record of 112.2 set in October 1990 Sources: Statistics Bureau, Ministry of Internal Affairs and Communications; Bank of Nevertheless, the leading indicator Japan; Economic and Social Research Institute; Cabinet Office and Government of Japan It has not yet been precisely determined that a new record has been set because the Cabinet Office council that researches economic indicators issues its analysis of business cycles (economic peaks and troughs) retroactively The current cycle’s trough, for example, which occurred in January 2001, was tentatively proclaimed in June 2003 and officially confirmed in November 2004 DI was below 50 from July to September, and the coincident indicators also fell after peaking in May, so the data2 could be taken as suggesting an impending economic correction Fig 1-4 D.I Trends 100 50 Leading Coincident Lagging 87 /1 88 -3 /1 89 -3 /1 90 -3 /1 91 -3 /1 92 -3 /1 93 -3 /1 94 -3 /1 95 -3 /1 96 -3 /1 97 -3 /1 98 -3 /1 99 -3 /1 00 -3 /1 01 -3 /1 02 -3 /1 03 -3 /1 04 -3 /1 05 -3 /1 06 -3 /1 -3 Fig 1-5 C.I Trends 130 120 110 100 90 80 70 60 50 73 /0 74 /1 76 /0 77 /1 79 /0 80 /1 82 /0 83 /1 85 /0 86 /1 88 /0 89 /1 91 /0 92 /1 94 /0 95 /1 97 /0 98 /1 00 /0 01 /1 03 /0 04 /1 06 /0 Leading Coincident Lagging Shaded areas indicate recession D.I plots average quarterly values, but data for October 2005 is monthly value Source: Cabinet Office Fig 1-6 Business Cycles in Japanese Economy Trough 1st cycle 2nd cycle 3rd cycle 4th cycle 5th cycle 6th cycle 7th cycle 8th cycle 9th cycle 10th cycle 11th cycle 12th cycle 13th cycle 1951/10 1954/11 1958/06 1962/10 1965/10 1971/12 1975/03 1977/10 1983/02 1986/11 1993/10 1999/01 Peak Period Trough 1951/06 1954/01 1957/06 1961/12 1964/10 1970/07 1973/11 1977/01 1980/02 1985/06 1991/02 1997/05 2000/11 1951/10 1954/11 1958/06 1962/10 1965/10 1971/12 1975/03 1977/10 1983/02 1986/11 1993/10 1999/01 2002/01 Average 33.2 Expansion 27 months 31 months 42 months 24 months 57 months 23 months 22 months 28 months 28 months 51 months 43 months 22 months Recession months 10 months 12 months 10 months 12 months 17 months 16 months months 36 months 17 months 32 months 20 months 14 months 17.1 Entire cycle 37 months 43 months 52 months 36 months 74 months 39 months 31 months 64 months 45 months 83 months 63 months 36 months 50.3 Current cycle continued for 60 months as of January 2007 Source: Cabinet Office Seen by past patterns, leading (coincident) indicators peak around a half year ahead of the economy’s peak B Characteristics of Current Economic Growth Fig 1-8 30.0 Sentiment on Three Excesses (Points) 50.0 Growth in Exports, Imports and Industrial Production Index from 1990 35.0 30.0 (%) 46.0 10.0 25.0 44.0 0.0 20.0 42.0 15.0 40.0 -10.0 38.0 10.0 36.0 Recession Over-staffing sentiment (excess – shortage) 34.0 Excess facilities sentiment (excess – shortage) Interest-bearing debt to total assets ratio (right axis) 32.0 5.0 -5.0 30.0 -10.0 -20.0 -40.0 (%) Fig 1-9 48.0 20.0 -30.0 m on t m hs on th m s 12 ont m hs 16 ont m hs 20 ont m hs 24 ont m hs 28 ont m hs 32 ont m hs 36 ont m hs 40 ont m hs 44 ont m hs 48 ont m hs 52 ont m hs 56 ont m hs on th s In the current economic growth Fig 1-7 C.I Trends for Previous and Current Business Cycles phase, as well as in the period from the collapse of the economic bubble to 135 around 2001, external demand in the (Business cycle trough = corporate sector has led the way The 130 months) current phase has also benefited from a 125 virtuous cycle of corporate profits boosting employment and consumer 120 sentiment, which in turn spurred consumer spending But companies 115 have yet to raise wages, especially contractually obligated payments, so 110 consumer spending has remained fragile March 1975~January 1977 105 and the recovery has been relatively September 1977~February 1980 sluggish compared to previous periods February 1983~June 1985 100 November 1986~March 1991 of economic growth (Fig 1-7) The October 1993~May 1975 private sector has worked to eliminate January 1999~October 2000 95 the so-called “three excesses,” i.e., January 2002~ excess debt, employment and facilities, so perceptions of oversupply in employment and facilities have been mostly eliminated (Fig 1-8), while Source: Cabinet Office banks nationwide have reduced bad debts by more than 60% from the peak With the three excesses now behind Japan, deflation also has nearly been eliminated Foreign countries also had a hand in the elimination of the three excesses In the 1990s, following the collapse of the Soviet bloc, China and other former socialist countries leveraged their low-cost labor to rapidly increase their presence on the supply side, which at first increased the breadth of direct and BoJ Tankan survey’s employment D.I is used for employment and manufacturing plant D.I is used for facilities Sources: Bank of Japan and Ministry of Finance 1991 - 1995 1996 - 2000 2001 - November 2006 Export volume index 91 / 92 1/ 93 1/ 94 1/1 95 / 96 1/ 97 1/1 98 / 99 1/ 00 1/ 01 1/1 02 / 03 1/ 04 1/1 05 - / 06 1-3 /1 -3 -50.0 0.0 Import volume index Industrial production index Sources: Ministry of Economy, Trade and Industry, and Ministry of Finance and credit cooperatives—businesses based on regional economies—still held non-performing loans amounting to greater than 10% of total credits These institutions continue to face the major task of writing off such loans (Fig 8-14) As a result, mergers accelerated among regional financial institutions within and between prefectures, as well as business/capital tie-ups Continued realignment is expected in 2007 and beyond (Fig 8-15) Fig 8-13 Non-Performing Loan Trends of All/Major Banks 80 (trillion yen) 8.4 70 60 50 40 8.4 10 8.0 Bad loan ratio (right axis) 7.4 6.8 Major 7.2 banks All banks All banks 5.8 6.5 7.0 6.0 5.3 Major banks 5.0 5.2 43.2 4.7 40.1 35.3 26.8 23.9 9.0 8.3 8.1 30 20 (%) 31.6 17.5 4.0 3.5 2.4 26.6 23.8 12.1 13.6 20.2 4.0 2.9 2.9 3.0 1.8 2.0 7.4 6.1 13.4 1.0 17.9 15.6 4.6 Financial Reconstruction Law debt (left axis) 0.0 2002 2003 2004 2005 2006 Figures based on debt as defined by Financial Reconstruction Law Bad loan ratio = bad loan balance/total credit “Major banks” are four major banks and their affiliates, plus Resona, Sumitomo Trust and Banking, and Chuo Mitsui Trust and Banking Source: Financial Services Agency Fig 8-14 Non-Performing Loan Ratios at Various Institutions Fig 8-15 16.0 14.0 Mar ％ 12.0 2005 June 10.7 10.0 Sept 8.0 7.1 6.9 6.0 4.0 Major Reorganizations of Regional Financial Institutions All banks Major banks Local financial institutions Cooperative financial institutions Credit associations Credit cooperatives Deposit-handling financial institutions Sept 4.5 3.6 Announcement of merger of Yamaguchi Bank and Momiji Holdings (3/06 business consolidation) Announcement of merger of Fukuoka Bank and Kumamoto Family Bank (4/06 business consolidation) Announcement of merger of Kiyou Bank and Wakayama Bank (10/06 business consolidation) Announcement of business tie-up of NishiNippon City Bank and Howa Bank 2.9 1.8 Announcement of business & capital tie-up of Fukuoka Bank and Shinwa Bank Announcement of merger of Aio Credit Association & Tatebayashi Credit Association (Gunma Prefecture) (11/07 business consolidation) Announcement of merger of Kanra Shinkin Bank, Tano Creidt Association & Gunma Shinkin Bank (11/07 business consolidation) 2006 99 /3 99 /9 00 /3 00 /9 01 /3 01 /9 02 /3 02 /9 03 /3 03 /9 04 /3 04 /9 05 /3 05 /9 06 /3 0.0 Oct Dec 2.0 Source: Financial Services Agency Sources: Company press releases and news organizations 69 D Stock, Securities and Foreign Exchange 1) Stock Market Sees Limited Upward Mobility The stock market trended favorably until around April, supported by foreign and domestic investors who were encouraged by strong corporate earnings and a bullish view of the Japanese economy Then the BOJ ended its easy-money policy, after which Livedoor, regarded as the standard-bearer for venture companies, came under suspicion of violating the Securities Exchange Law Nevertheless, despite a correction in the emerging-stocks market, which had performed well in the previous year, the effect on the market overall was temporary and limited due to the perception that the general trajectory of economic recovery would not change Thereafter, however, a general correction occurred due to concerns about earnings among exporters as a result of the rising yen and a global trend towards tighter money By June, the TOPIX index had fallen nearly 20% from the April high of 1,783.72 points Despite strong earnings and the absence of any really bad news regarding fundamentals, foreign and individual investors stopped showing the aggressiveness they had demonstrated in 2005 Upward mobility of the markets was thus limited through early autumn By the end of 2006, the market had come back to levels seen at the beginning of the year, encouraged by the strength of the economy and expectations of financial easing in the United States (figs 8-16 & 8-17) But Japanese stocks, which had compared favorably to other major nations in 2005, were weak by international comparison in 2006 (Fig 8-18) Fig 8-16 TOPIX and TSE 1st Section Trading Volume (Million shares) 8,000 (Points) 1,800 Trading volume (right axis) TOPIX 1,600 6,000 1,400 4,000 1,200 2,000 1,000 Sources: TSE and Thomson Financial Fig 8-17 Major Stock Market Indices 140 TSE Mothers Nikkei Average TOPIX 130 120 JASDAQ TOPIX 110 100 90 80 70 60 1/06=100 50 40 05/01 05/04 05/07 05/10 06/01 06/04 06/07 06/10 Source: Thomson Financial Fig 8-18 Performance of Major Stock Markets 50 40 30 20 10 -10 -20 -30 -40 -50 160 (%) (%) 110 60 10 S&P500 (U.S.) 02 CAC (France) DAX (Germany) 01 NASDAQ (U.S.) FT100 (Britian) 2000 TOPIX 03 04 05 06/09 06/06 06/03 06/01 05/10 05/07 05/05 05/02 04/11 04/09 04/06 04/03 04/01 800 06 Source: Thomson Financial 70 -40 Hang Seng (Hong Kong) Straits Times (Singapore) BSE (India) KOSPI (South Korea) -90 Taiwan Weighted SHCOMP (Shanghai) TOPIX -140 2000 01 02 03 04 05 06 2) Interest Rates: Long-Term Rate Drops from Mid-2006 Amid continued money tightening Fig 8-19 Key Interest Rates in Major Countries/Regions worldwide throughout 2006, long-term interest rates in major countries followed a downward Japan unsecured overnight call rate (% U.S FF rate target trend after the middle of the year Japan, after Britain repo rate switching to a tightened money policy, did not Canada overnight rate see a definite rising trend in its long-term ECB repo rate interest rates (figs 8-19 & 8-20) The yield on 10-year government bonds rose temporarily above 2.0% in May, in light of expectations of an interest rate hike, but then trended downward from midyear in anticipation of a halt to U.S interest rate hikes, corrections in the stock market and downward movement in inflation accompanying the revised CPI 01/01 02/01 03/01 04/01 05/01 06/01 Toward the yearend, the rate moved in a downward trajectory as rising expectations of Source: National central banks an additional rate hike by the BOJ mingled with pessimism about the Japanese Fig 8-20 Leading Nations’ 10-Year Government Bond Yields economy At yearend, the range was between 1.5% and 1.6% (Fig 8-21) 9.0 Japan Britain (% ) 8.0 Germany South Korea U.S Singapore 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 01/01 02/01 03/01 04/01 05/01 Source: Thomson Financial Fig 8-21 Short- & Long-Term Interest Rates 3.5 3.0 Unsecured overnight call Corporate bond yield 10-yr gov bonds (benchmark yield) Prime rate (long-term) (%) 2.5 2.0 1.5 1.0 0.5 0.0 01/01 02/01 03/01 04/01 Sources: BOJ and Thomson Financial 71 05/01 06/01 06/01 3) Foreign Exchange: Yen Weakens Towards Yearend Fig 8-23 Yen/Dollar Rate and U.S./Japan Interest Rate Gap 122 (Yen/dollar) (%) 3.1 3.0 2.9 140 130 130 125 120 120 115 110 110 105 06 /0 06 /0 100 05 /0 100 Source: Thomson Financial 2.8 (Points) Strong yen Weak yen 150 2.7 2.6 06 Source: BOJ Source: Thomson Financial 72 06/01 2.5 03/01 100 /0 06 /0 06 /0 06 /0 06 /0 06 /0 06 /0 06 /0 06 /1 06 /1 06 /1 104 200 00/01 Japan-U.S long-term interest rates gap (U.S./Japan, right axis) 250 97/01 106 300 85/01 108 Yen/dollar 350 94/01 110 150 135 91/01 112 140 88/01 114 160 Yen/dollar Yen/euro 145 3.2 116 150 400 3.3 118 (Yen/euro) (Yen/dollar) Fig 8-24 Nominal Effective Exchange Rate of Yen 3.4 120 Fig 8-22 Yen/Dollar & Yen/Euro Rates 05 /0 The dollar was sold against other currencies in 2006 Early in the year, the yen broke through US$1 to 110 yen This seems to have been in reaction to the risk of global imbalances, as voiced at the G7 summit of finance ministers and central bank presidents in Washington, D.C in April The summit strengthened fears of twin (current account and budget) deficits in the U.S., which led to dollar sell-offs Thereafter, however, the yen/dollar rate paralleled the gap in long-term interest rates between Japan and the United States By yearend, the yen had weakened to around 120 yen against the dollar At the same time, the yen was also being sold against the euro, breaking above 150 yen for the first time since October 1998 (figs 8-22 & 8-23) The yen was also sold against other foreign currencies, resulting in its nominal effective exchange rate (against the currencies of major export partners, weighted by customs clearance and exports) falling to the lowest level since Japan’s financial crisis spawned a rapid sell-off of the yen in 1998 (Fig 8-24) E Increased Polarization of Real Estate Market Fig 8-26 Urban Land Price Index for Prime Locations (Sept 2006) 12.0 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 -8.0 All uses (% YoY) 20.0 2005 2007 (est.) -2.7 -6.2 -3.8 -6.3 Other than metropolitan areas -5.0 Other than metropolitan areas 2.5 -4.4 -7.3 Nationwide 2.8 -15.0 metropolitan areas Central Tokyo 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 -5.0 -10.0 -15.0 2005 2006 4.2 2007 (est.) 5.2 4.2 -2.3 -0.9 -4.7 Nationwide -3.7 -3.9 -7.0 -10.0 9.5 -2.9 -4.8 Other than metropolitan areas 11.1 2007 (est.) -3.1 0.0 Residential -2.7 2006 5.0 -3.1 (% YoY) -2.1 19.2 17.3 2005 10.0 2.9 -0.9 -3.5 Commercial (% YoY) 15.0 2006 Nationwide 12.0 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 8.1 25.0 9.8 9.2 metropolitan areas Central Tokyo Highest-priced (% YoY) Central Tokyo The 2007 estimate is end March 2006 to end March 2007 Source: Japan Real Estate Research Institute 73 metropolitan areas 27.7 23.7 2005 17.1 2006 8.9 2007 (est.) -3.4 -7.7 Nationwide 5.7 -3.1 -2.3 -1.4 -8.2 Other than metropolitan areas metropolitan areas Central Tokyo 04 02 00 98 96 94 92 Although real estate (land) prices had been falling Fig 8-25 Real Estate Price Fluctuations since 1991, the decline slowed for three straight years 0.0(% YoY) starting in 2003, pointing to a possible leveling off The urban land price index for the end of September (released by the Japan Real Estate Institute in November 2006) -5.0 revealed a 3.5% year-on-year decline nationwide for all land This was the smallest decline since real estate prices peaked in March 1992 (Fig 8-25) -10.0 The polarization of real estate prices, which became Metropolitan Tokyo apparent around 2003, was even more striking in 2006 Metropolitan Osaka The rally in prices was driven by commercial and -15.0 Metropolitan Nagoya residential land in large metropolitan areas, such as Regional average Tokyo proper Although declines in other areas of the National average country gradually slowed, the gap widened and was -20.0 expected to continue in 2007 (Fig 8-26) The market was driven by REITs (real estate investment trusts) and real estate investment fund Source: Ministry of Land, Infrastructure and Transport managers looking for attractive returns on investment in the face of super-low interest rates in Japan Demand was concentrated on the centers of major cities, primarily large, new buildings in urban hubs Analysts suggest that this segment overheated In the future, higher fund-procurement rates and lowered priority on fixed interest-bearing securities such as bonds make it unlikely that the boom will be sustained However, investors are generally expected to remain aggressive (Fig 8-27) Moreover, considering the facts that the demand for real estate has long roots, overheating has occurred in only one segment and current prices overall are not unreasonable, the market should hold steady in 2007 Fig 8-27 Real Estate Investment Plans for Next Year (multiple answers) Survey date No of companies polled No of companies/percentage Will aggressively make new investments Will refrain from new investments for now Will sell existing real estate Apr 2004 Oct 2004 Apr 2005 Oct 2005 Oct 2006 73 74 74 82 88 # % # % # % # % # % 63 15 86 11 21 67 23 91 31 67 19 91 26 74 13 93 16 83 17 94 19 Source: Japan Real Estate Research Institute F Key Points to Watch When the Bank of Japan held its policy board meeting on January 18, 2007 (while this report was being written), it did not change the 0.25% unsecured call rate (overnight) According to a survey conducted by the Economic Planning Association in the second half of November 2006, most economists and analysts thought the BOJ would raise the rate before the end of January However, the central bank revised downward its October economic forecast and thus decided against a raise, saying, “Prices for domestic corporate goods are expected to be slightly below the October forecast due in part to a reactionary fall in oil prices.” As for an interest rate hike after February, unified local elections in April and a House of Councilors election in July will make it difficult to predict the timing of a hike As trends become clearer regarding the stability of the Japanese and U.S economies and rising prices in Japan, the BOJ can be expected to clarify its tight-money stance by the latter half of 2007 74 Column 9: Heightened Interest in Takeover Bids Takeover bids (TOB), or the buying up Fig TOB Trends among Firms in Japan of massive amounts of stock from the 80 30 (billion US$) (Number of bids) general public without working through the 70 25 market, have rapidly become a 60 Value 20 representative form of M&A investment in Bids (right axis) 50 recent years In 2006, the value of these 15 40 investments skyrocketed 441.1% to $28.2 30 10 billion and the number of bids climbed 20 34.1% to 59, both all-time highs (Fig 1) 10 The rapid increase, including large-scale 0 deals like Softbank’s acquisition of the 1999 2000 01 02 03 04 05 06 Japan subsidiary of Vodafone of the U.K., Bidding companies are both Japanese and foreign Figures exclude stock buybacks Source: Thomson Financial was due to the expanded recognition that the acquisition of other companies is a shortcut to increased market share in a mature market, and that TOB are an effective means toward that end Some TOB are considered hostile, wherein takeovers are advanced in opposition of a company’s management Hostile TOB increased notably in 2006 (Fig 2), including examples of foreign funds pursuing of high returns by acquiring excellent yet comparatively low priced companies Good examples were Steel Partners’ takeover of Myojo Foods Company and Oji Paper Co.’s attempted hostile acquisition of Hokuetsu Paper Mills to purge the industry of excess production capacity Although this latter attempt ended in failure, it attracted attention as the case of a major, well-established firm attempting to expand business, unlike most fund-driven TOB Fig Hostile TOB in 2006 TOB Target Industry Bidder Industry Myojo Foods Co., Ltd Foods Steel Partners Inc Financial Hokuetsu Paper Mills Ltd Paper & pulp Oji Paper Co., Ltd Paper & pulp Origin Toshu Co., Ltd Restaurant business Don Quijote Co., Ltd General merchandise Sun Telephone Co., Ltd Electrical machinery JMBO Fund Ltd Financial Includes hostile TOB by foreign-owned companies, and withdrawn bids Gray area shows successful bid Source: Thomson Financial 75 Nationality U.S Japan Japan Cayman Islands Japanese Major Economic Indicators Appendix Table 1: Gross domestic expenditure Domestic demand Gross domestic expenditure (2000 prices) CY Quarter Private-sector demand Public-sector demand Government Public fixed Private final Private Private plant Private final capital consumption housing & equipment inventory consumption formation expenditure investment investment investment expenditure Public inventory investment Net exports of goods & Exports of Imports of services goods & goods & services services 1995 2.0 2.6 2.5 1.9 -4.8 3.0 0.6 2.7 3.9 0.6 -0.0 1996 2.7 3.3 3.1 2.5 11.8 1.6 0.1 4.0 2.9 5.7 0.0 1997 1.6 0.5 1.4 0.7 -12.1 8.4 0.1 -2.3 0.8 -7.7 -0.0 1998 -2.0 -2.4 -3.1 -0.9 -14.3 -6.5 -0.2 -0.2 1.8 -4.2 -0.0 1999 -0.1 -0.0 -1.5 1.0 0.2 -4.3 -1.0 4.6 4.2 5.7 -0.0 2000 2.9 2.4 3.2 0.7 0.9 7.5 0.9 0.1 4.3 -10.0 0.1 2001 0.2 1.0 1.0 1.6 -5.3 1.3 -0.2 1.1 3.0 -3.0 -0.0 2002 0.3 -0.4 -0.7 1.1 -4.0 -5.2 -0.3 0.4 2.4 -4.8 0.0 2003 1.4 0.8 1.4 0.4 -1.0 4.4 0.2 -1.1 2.3 -10.8 -0.0 2004 2.7 1.9 2.8 1.6 1.9 5.6 0.3 -0.6 1.9 -9.0 0.0 2005 1.9 1.7 2.2 1.6 -1.3 6.6 -0.1 0.1 1.7 -6.2 0.0 2000/1-3 1.8 1.3 1.7 0.3 1.5 4.0 0.5 -0.1 1.3 -4.3 -0.3 4-6 0.2 0.2 0.0 -0.3 1.9 -1.9 0.4 1.0 1.7 -0.3 -0.0 7-9 0.2 0.1 0.2 -0.2 -2.6 3.6 -0.1 -0.2 0.9 -2.7 -0.2 10-12 0.9 1.4 2.1 0.9 2.5 5.6 0.1 -0.8 0.6 -4.7 -0.3 2001/1-3 0.5 0.8 0.4 0.9 -0.7 -1.8 0.1 2.1 0.4 7.1 0.5 4-6 -0.5 -0.4 -0.2 0.5 -7.0 -0.3 -0.1 -0.9 1.2 -5.2 -0.4 7-9 -1.1 -1.1 -1.5 -0.5 -0.6 -1.1 -0.6 -0.1 0.1 -0.7 -0.0 10-12 -0.5 -0.6 -0.9 0.4 0.0 -6.6 0.1 0.4 1.4 -2.9 -0.2 2002/1-3 0.4 -0.1 -0.3 0.1 -1.9 0.4 -0.3 0.6 0.3 2.0 0.1 4-6 0.9 0.5 0.7 0.8 1.0 -1.1 0.2 -0.2 0.4 -2.0 -0.1 7-9 0.6 0.9 1.1 0.6 -1.1 1.3 0.4 0.1 0.8 -1.7 -0.1 10-12 0.1 -0.1 -0.0 -0.3 -1.1 1.3 0.0 -0.5 0.2 -2.2 -0.1 2003/1-3 -0.3 -0.4 -0.4 -0.1 -0.9 -0.6 -0.1 -0.4 0.6 -3.3 -0.2 4-6 0.7 0.4 0.4 -0.2 0.5 2.9 0.0 0.1 1.0 -2.9 -0.2 7-9 0.5 0.3 0.7 0.2 2.2 0.1 0.3 -0.7 0.4 -3.8 -0.2 10-12 1.5 1.2 1.7 1.2 -1.8 6.9 -0.3 -0.3 0.9 -3.6 -0.2 2004/1-3 1.3 1.0 0.6 0.6 0.5 -4.0 0.6 2.3 0.5 8.2 0.4 4-6 -0.3 -0.6 0.2 0.1 1.9 3.7 -0.5 -3.0 -0.1 -13.1 -0.7 7-9 0.3 0.5 0.7 0.2 0.1 1.0 0.3 -0.3 0.3 -2.8 -0.1 10-12 -0.1 -0.0 -0.2 -0.6 -0.0 1.5 0.0 0.4 0.6 -0.9 -0.0 2005/1-3 0.8 0.9 0.9 0.8 -1.5 2.5 -0.1 0.8 1.3 -1.1 -0.1 4-6 0.8 0.5 1.0 0.9 -1.6 1.6 0.1 -1.0 -0.7 -1.7 -0.1 7-9 0.7 0.7 0.4 0.6 1.0 0.9 -0.2 1.9 1.3 4.2 0.2 10-12 0.5 -0.0 0.3 0.5 1.5 -0.8 0.0 -1.3 -1.2 -1.2 -0.1 2006/1-3 0.7 0.6 0.9 -0.1 0.9 3.6 0.2 -0.6 -0.2 -1.9 -0.1 4-6 0.3 0.4 0.7 0.5 -2.1 3.2 -0.2 -0.9 0.7 -6.9 -0.3 7-9 0.2 -0.2 -0.2 -0.9 -0.3 1.5 0.2 -0.4 0.7 -5.3 -0.2 Notes: All figures are second preliminary estimates for July - September 2006 Real GDP calculations before 1994 use the fixed-base-year method and after 1995 use the chain-linking-year metho All real GDP figures are year-on-year percentage changes Quarterly nominal GDP is a seasonally adjusted annual rate Private and public inventory investments and net exports of goods & services are contributions to changes in real gross domestic expenditu Source: Cabinet Office Appendix Gross domestic expenditure (current price) Billion yen -0.5 -0.5 1.0 0.4 -0.1 0.5 -0.8 0.7 0.7 0.8 0.3 0.6 -0.0 0.1 -0.5 -0.4 -0.2 -0.0 0.0 0.5 0.4 -0.2 0.3 0.0 0.4 0.2 0.4 0.3 0.3 -0.2 -0.1 -0.0 0.3 0.0 0.6 0.1 -0.1 0.4 4.3 5.9 11.1 -2.7 1.9 12.7 -6.9 7.5 9.2 13.9 7.0 5.4 3.0 2.3 -1.2 -3.3 -3.8 -2.2 -2.5 5.4 6.5 0.5 3.4 1.3 0.5 3.1 5.1 5.0 3.2 0.2 1.6 -0.3 3.4 3.0 3.8 2.3 0.7 2.5 13.3 13.4 0.5 -6.8 3.6 9.2 0.6 0.9 3.9 8.1 5.8 0.1 4.0 2.2 3.5 -0.1 -2.6 -2.3 -2.9 1.0 2.9 3.0 1.3 1.3 -2.9 2.1 2.5 3.0 1.3 2.1 2.7 -0.3 1.2 3.5 -0.2 1.9 1.3 -0.5 493,588.1 504,261.9 515,249.1 504,842.9 497,628.6 502,989.9 497,719.7 491,312.2 490,294.0 498,328.4 501,402.6 504,088.4 502,745.2 501,803.4 504,570.4 507,441.9 501,063.7 493,426.8 489,414.0 491,980.5 490,949.4 491,793.0 490,996.4 486,543.7 490,367.9 490,703.9 494,574.1 499,687.0 497,792.0 497,858.1 498,354.6 499,084.5 501,064.7 501,722.6 503,959.8 506,203.0 506,240.6 506,235.8 YoY change(%) 1.4 2.2 2.2 -2.0 -1.4 1.1 -1.0 -1.3 -0.2 1.6 0.6 1.3 -0.3 -0.2 0.6 0.6 -1.3 -1.5 -0.8 0.5 -0.2 0.2 -0.2 -0.9 0.8 0.1 0.8 1.0 -0.4 0.0 0.1 0.1 0.4 0.1 0.4 0.4 0.0 -0.0 Appendix Table 2: Consumer Indices Total sales by large retailers Income and expenditure of worker households nationwide Real income Yen CY Quarter Month YoY change (nominal, %) Consumption expenditure Yen YoY change (nominal, %) Sales by Department Stores The number of passenger sales Real consumption expenditure Disposal Income Average propensity to consume Adjusted Adjusted YoY change (%) Yen % YoY change (%) YoY change (%) 1995 570,817 0.6 349,663 -1.0 -0.7 482,174 72.5 -1.9 1996 579,461 1.5 351,755 0.6 0.6 488,537 72.0 -0.3 1997 595,214 2.7 357,636 1.7 0.1 497,036 72.0 -1.5 1998 588,916 -1.1 353,552 -1.1 -1.8 495,887 71.3 -4.4 1999 574,676 -2.4 346,177 -2.1 -1.7 483,910 71.5 -4.3 2000 560,954 -2.4 340,977 -1.5 -0.6 472,823 72.1 -4.6 2001 551,160 -1.7 335,042 -1.7 -0.8 464,723 72.1 -3.0 2002 538,277 -2.3 330,651 -1.3 -0.2 452,501 73.1 -2.2 2003 524,542 -2.6 325,823 -1.5 -1.2 440,461 74.0 -3.2 2004 530,028 1.0 330,836 1.5 1.5 444,966 74.4 -3.5 2005 522,629 -1.4 328,649 -0.7 -0.3 439,672 74.7 -2.3 2000/1-3 479,698 -3.2 337,357 -1.2 -0.4 401,944 83.9 -3.2 4-6 575,646 -2.4 337,479 -0.9 0.0 471,424 71.6 -5.0 7-9 529,743 -1.7 335,036 -2.8 -1.9 446,497 75.0 -5.3 10-12 658,731 -2.4 354,037 -1.1 -0.4 571,427 62.0 -4.9 2001/1-3 469,577 -2.1 338,790 0.4 1.0 394,261 85.9 -3.4 4-6 569,909 -1.0 323,623 -4.1 -3.1 469,502 68.9 -2.9 7-9 516,543 -2.5 328,875 -1.8 -0.8 434,238 75.7 -2.4 10-12 648,613 -1.5 348,881 -1.5 -0.2 560,892 62.2 -3.4 2002/1-3 476,959 1.6 328,970 -2.9 -1.2 399,606 82.3 -2.7 4-6 555,893 -2.5 324,237 0.2 1.3 455,539 71.2 -1.4 7-9 502,395 -2.7 331,390 0.8 1.7 420,127 78.9 -2.3 10-12 617,861 -4.7 338,009 -3.1 -2.6 534,731 63.2 -2.2 2003/1-3 448,925 -5.9 321,361 -2.3 -2.0 374,766 85.7 -1.9 4-6 543,093 -2.3 320,804 -1.1 -0.9 444,291 72.2 -3.4 7-9 493,203 -1.8 323,719 -2.3 -2.0 415,881 77.8 -4.2 10-12 612,945 -0.8 337,407 -0.2 0.2 526,907 64.0 -3.2 2004/1-3 458,141 2.1 330,694 2.9 3.0 388,550 85.1 -2.2 4-6 551,399 1.5 332,282 3.6 4.0 448,379 74.1 -3.9 7-9 502,699 1.9 326,600 0.9 1.0 423,306 77.2 -3.4 10-12 607,874 -0.8 333,769 -1.1 -1.7 519,627 64.2 -4.5 2005/1-3 457,317 -0.2 331,064 0.1 0.3 388,185 85.3 -4.0 4-6 549,562 -0.3 326,198 -1.8 -1.7 449,768 72.5 -2.4 7-9 485,976 -3.3 319,806 -2.1 -1.7 409,840 78.0 -2.4 10-12 597,661 -1.7 337,526 1.1 1.9 510,894 66.1 -0.6 2006/1-3 440,300 -3.7 320,981 -3.0 -2.8 373,303 86.2 -1.7 4-6 527,419 -4.0 318085.0 -2.5 -2.7 430,957 77.9 -1.2 7-9 506,736 4.3 309720.0 -3.2 -4.0 427,221 73.7 -0.2 2003/Jan 436,443 -5.2 319,809 -2.5 -2.0 365,040 87.6 -2.3 Feb -4.6 -1.9 -1.6 -0.6 454,249 293,966 378,505 77.7 Mar -7.7 -2.5 -2.3 -2.7 456,083 350,306 380,753 92.0 -2.6 -1.0 -1.0 -3.9 Apr 473,191 343,254 391,682 87.6 May -2.6 -2.1 -1.8 -3.6 429,663 307,078 341,005 90.1 Jun -1.9 -4.9 0.4 -2.9 726,426 312,081 600,185 52.0 Jul -1.4 -2.0 -6.0 -4.0 575,142 326,772 479,433 68.2 Aug -2.5 -0.9 2.2 -3.4 474,041 328,498 405,063 81.1 Sep -1.7 0.3 -1.9 -5.5 430,427 315,887 363,146 87.0 Oct -1.4 0.4 -1.1 0.3 466,543 322,098 398,750 80.8 Nov 436,041 -0.4 307,084 1.4 0.4 370,843 82.8 -5.6 Dec 936,252 -0.7 383,037 -3.6 1.1 811,127 47.2 -4.0 2004/Jan 444,130 1.8 329,574 3.1 3.4 377,827 87.2 -2.0 Feb 472,839 4.1 314,355 6.9 6.9 403,940 77.8 0.5 Mar 457,455 0.3 348,152 -0.6 -0.5 383,884 90.7 -4.7 Apr 487,026 2.9 366,027 6.6 7.2 402,209 91.0 -3.3 May 445,993 3.8 322,716 5.1 5.6 347,884 92.8 -3.5 Jun 721,178 -0.7 308,104 -1.3 -1.3 595,043 51.8 -5.0 Jul 595,323 3.5 335,623 2.7 2.9 498,269 67.4 -1.5 Aug 473,222 -0.2 327,142 -0.4 -0.2 399,416 81.9 -5.4 Sep 439,551 2.1 317,035 0.4 0.3 372,234 85.2 -3.5 Oct 466,815 0.1 324,273 0.7 0.1 400,271 81.0 -4.2 Nov 442,086 1.4 307,563 0.2 -0.7 374,804 82.1 -5.3 Dec 914,720 -2.3 369,470 -3.5 -3.8 783,807 47.1 -4.2 2005/Jan 449,725 1.3 338,183 2.6 2.6 381,133 88.7 -1.2 Feb 469,941 -0.6 301,371 -4.1 -3.8 400,103 75.3 -6.7 Mar 452,284 -1.1 353,639 1.6 1.7 383,318 92.3 -4.5 Apr 492,832 1.2 354,991 -3.0 -3.1 417,554 85.0 -2.3 May 438,629 -1.7 317,010 -1.8 -2.0 336,653 94.2 -3.1 Jun 717,224 -0.5 306,591 -0.5 0.1 595,098 51.5 -1.9 Jul 572,399 -3.9 323,515 -3.6 -3.3 480,128 67.4 -1.7 Aug 459,994 -2.8 321,682 -1.7 -1.3 389,573 82.6 -3.0 Sep 425,536 -3.2 314,221 -0.9 -0.4 359,818 87.3 -2.7 Oct 462,155 -1.0 325,501 0.4 1.3 395,606 82.3 -3.3 Nov 431,508 -2.4 307,309 -0.1 0.9 365,707 84.0 0.8 Dec 899,321 -1.7 379,769 2.8 3.2 771,370 49.2 0.6 2006/Jan 434,252 -3.4 323,863 -4.2 -4.7 367,666 88.1 -2.8 Feb 458,878 -2.4 298,960 -0.8 -1.2 390,808 76.5 -1.9 Mar 427,771 -5.4 340,121 -3.8 -4.0 361,436 94.1 -0.3 Apr 471,305 -4.4 341,812 -3.7 -4.1 400,105 85.4 -0.9 May 425,295 -3.0 310,088 -2.2 -2.8 327,139 94.8 -1.6 Jun 685,658 -4.4 302,355 -1.4 -2.0 565,627 53.5 -1.2 Jul 613,876 7.2 321,752 -0.5 -1.0 513,119 62.7 -1.4 Aug 476,724 3.6 313,428 -2.6 -3.6 405,917 77.2 0.1 Sep 429,609 1.0 293,979 -6.4 -7.1 362,626 81.1 0.8 Oct 467,580 1.2 318,858 -2.0 -2.6 396,013 80.5 -1.7 Nov -0.7 Notes: Figures in italics are estimates Vehicle sales include new ordinary, small and light vehicle Total sales by large retailers and Sales by Department Stores exclude the effects of the increase in the number of store Sources: Ministry of Public Management, Home Affairs, Posts and Telecommunications, Ministry of Economy, Trade and Indust Japan Automobile Dealers Association Appendix -2.1 1.3 -0.8 -4.7 -3.1 -2.5 -0.5 -2.1 -2.6 -2.8 -0.5 -0.8 -3.0 -3.4 -2.7 -1.8 0.3 -0.1 -0.5 -1.0 -1.6 -2.5 -3.0 -2.0 -3.3 -2.9 -2.3 -1.1 -3.0 -3.0 -3.8 -3.0 -0.4 -0.1 1.2 0.4 -1.1 -0.4 -1.8 0.0 -3.6 -4.7 -3.0 -2.1 -2.1 -1.7 -5.2 0.6 -4.1 -3.0 -0.1 2.3 -4.5 -1.0 -2.4 -5.4 -0.8 -4.7 -4.2 -3.5 -5.4 -2.8 0.7 -7.2 -3.2 -0.5 -1.4 0.7 0.6 -1.1 0.0 -0.4 3.1 0.9 -0.9 0.3 1.8 -0.4 -1.2 -1.9 -1.4 -0.8 1.3 -2.0 -0.2 1,000units 4,444 4,669 4,492 4,093 4,154 4,260 4,290 4,441 4,716 4,768 4,748 1,258 974 1,018 1,010 1,255 981 1,051 1,003 1,260 1,022 1,115 1,045 1,443 1,041 1,152 1,080 1,469 1,007 1,179 1,113 1,450 1,091 1,171 1,036 1,457 1,041 1,118 315 442 686 303 341 397 426 280 446 370 357 353 329 442 698 302 319 385 431 292 456 350 391 372 325 441 685 329 345 417 422 291 458 345 366 326 325 443 688 313 323 406 396 283 438 332 362 YoY change (%) 5.6 5.1 -3.8 -8.9 1.5 2.5 0.7 3.5 6.2 1.1 -0.4 2.5 3.8 0.6 3.4 -0.2 0.7 3.2 -0.7 0.4 4.2 6.1 4.2 14.6 1.9 3.3 3.3 1.8 -3.3 2.3 3.1 -1.3 8.4 -0.7 -7.0 0.5 -4.6 -4.6 12.2 12.3 17.2 -2.6 4.6 3.1 5.6 -1.1 4.1 7.9 -2.1 4.6 4.2 -0.0 1.8 -0.4 -6.3 -2.8 1.2 4.2 2.2 -5.3 9.6 5.5 -1.1 -0.4 -1.9 8.9 7.9 8.3 -2.0 -0.3 0.4 -1.6 -6.6 -12.4 0.1 0.7 0.5 -5.0 -6.4 -2.8 -6.2 -2.5 -4.3 -3.6 -0.9 Appendix Table Production Indices Indices of Industrial Production (Original Series) Production Producers' shipments YoY YoY change change (%) (%) CY Quarter Month Producers’ Producers' finished inventory-togoods inventory shipments ratio YoY change (%) Operating Ratio (Manufacturing original index) YoY change YoY change (%) (%) Orders received for Machinery (Private sector, excluding volatile orders) New housing starts 1,000 units YoY change (%) Billion Yen (Original Series) YoY change (%) Financial Statement Statistics of Corporations (all industries) Plant & equipment investment BillionYen Change (Seasonally from previous adjusted) quarter (%) YoY change (%) Business profit YoY change (%) Indices of Indices of Tertiary All Industries Industry Activities Activities (Original index) (Original index) YoY change YoY change (%) (%) Company failures Number 1995 3.3 2.6 5.7 1.7 2.6 1,470 -6.4 116,672 6.7 3.9 7.9 1.7 1.5 15,108 1996 2.2 2.7 -0.2 1.1 1.0 1,643 11.8 130,930 12.2 3.6 -3.0 2.7 2.5 14,834 1997 3.6 4.0 6.0 -1.0 3.4 1,387 -15.6 129,939 -0.8 1.5 -3.9 1.0 0.7 16,464 1998 -6.9 -5.6 -7.5 10.4 -7.5 1,198 -13.6 109,074 -16.1 -15.1 -23.4 -1.4 -3.0 18,988 1999 0.2 1.1 -6.9 -8.4 -0.3 1,215 1.4 101,318 -7.1 -8.8 15.6 0.1 0.4 15,352 2000 5.7 5.8 2.1 -3.2 4.4 1,230 1.3 120,558 19.0 8.6 28.7 1.8 2.1 18,769 2001 -6.8 -6.3 -0.7 10.4 -7.6 1,174 -4.6 113,512 -5.8 -6.2 -21.5 1.1 -0.9 19,164 2002 -1.3 -0.2 -8.0 -7.6 1.2 1,151 -1.9 99,875 -12.0 -18.5 8.4 -0.1 -0.4 19,087 2003 3.3 4.0 -2.4 -4.0 4.1 1,160 0.8 110,545 10.7 6.3 14.6 0.9 0.8 16,255 2004 5.5 5.3 -0.3 -2.6 4.8 1,189 2.5 115,442 4.4 26.7 18.7 2.4 2.4 13,679 2005 1.1 1.5 5.3 3.9 1.6 1,236 4.0 123,649 7.1 △ 3.8 9.5 2.2 1.9 12,998 2000/1-3 5.3 5.6 -2.8 -6.8 5.9 276 4.2 32,308 11.7 28,691 8.3 3.3 28.5 1.5 2.0 4,539 4-6 6.9 7.6 -1.1 -5.0 6.4 321 -0.9 26,577 20.2 29,065 1.3 2.2 30.3 1.7 2.3 4,621 7-9 5.5 5.7 -0.8 -2.1 4.0 311 -2.6 32,383 25.3 31,548 8.5 0.2 15.3 1.6 2.0 4,895 10-12 5.2 4.6 2.1 1.7 1.5 322 4.7 29,290 19.9 31,663 0.4 7.1 23.5 2.5 2.4 4,714 2001/1-3 -0.2 0.0 2.3 5.3 -3.4 260 -6.0 33,778 4.6 30,142 -4.8 2.5 -3.5 2.1 1.6 4,557 4-6 -4.6 -4.6 4.7 11.1 -5.8 301 -6.2 26,793 0.8 29,192 -3.2 2.3 -4.2 1.6 -0.4 4,749 7-9 -9.5 -8.8 3.6 13.3 -9.4 310 -0.2 28,969 -10.5 28,356 -2.9 0.5 -27.2 0.7 -1.9 4,670 10-12 -12.6 -11.5 -0.7 11.9 -11.8 303 -5.9 23,971 -18.2 25,681 -9.4 -14.5 -31.1 0.0 -2.8 5,188 2002/1-3 -9.8 -8.4 -6.1 3.7 -7.7 259 -0.2 26,888 -20.4 24,355 -5.2 -16.8 -16.6 -0.6 -2.6 4,598 4-6 -3.4 -1.9 -11.3 -8.5 -1.1 307 2.0 23,070 -13.9 24,704 1.4 -15.5 -11.7 -0.2 -0.8 4,780 7-9 3.3 3.4 -9.9 -12.4 5.7 291 -6.2 26,433 -8.8 25,611 3.7 -13.9 11.7 0.7 1.0 4,763 10-12 6.0 6.7 -8.0 -12.6 8.5 295 -2.7 23,485 -2.0 25,029 -2.3 -1.8 14.2 -0.2 0.9 4,586 2003/1-3 5.5 5.7 -5.8 -9.5 6.9 253 -2.2 29,677 10.4 27,171 8.6 -3.0 11.7 0.6 1.1 4,458 4-6 2.2 3.0 -2.8 -3.4 3.9 313 2.2 25,300 9.7 26,740 -1.6 6.4 4.6 0.8 0.7 4,328 7-9 1.0 2.0 -1.6 -0.1 1.6 289 -0.5 27,801 5.2 27,258 1.9 0.4 10.3 0.2 0.1 3,855 10-12 4.1 4.9 -2.4 -2.4 4.2 304 3.0 27,768 18.2 29,572 8.5 5.1 22.0 1.8 1.5 3,614 2004/1-3 6.9 7.0 -1.3 -4.9 6.0 267 5.4 30,210 1.8 27,819 -5.9 10.2 20.8 2.5 2.7 3,669 4-6 7.2 7.1 -0.8 -3.1 5.6 302 -3.7 28,303 11.9 29,734 6.9 9.7 33.4 2.5 2.9 3,403 7-9 6.4 6.3 0.8 -1.8 5.6 317 9.4 28,847 3.8 28,346 -4.7 13.9 29.4 2.4 2.8 3,310 10-12 1.8 1.6 -0.3 -0.1 2.1 304 -0.1 28,082 1.1 29,730 4.9 3.0 12.8 2.0 1.6 3,297 2005/1-3 1.2 0.4 2.5 4.3 1.5 271 1.5 33,059 9.4 30,208 1.6 6.9 10.7 2.1 1.7 3,176 4-6 0.3 0.2 2.3 2.7 2.3 308 2.1 28,875 2.0 30,144 -0.2 6.7 5.2 1.9 1.5 3,225 7-9 -0.2 0.9 3.1 4.1 0.3 333 4.8 31,351 8.7 31,104 3.2 10.6 3.7 2.2 1.7 3,163 10-12 3.0 4.2 5.3 4.4 2.6 325 7.0 30,363 8.1 31,965 2.8 8.8 4.5 2.6 2.6 3,434 2006/1-3 3.2 4.6 3.2 2.2 1.7 284 4.7 34,309 3.8 31,850 -0.4 13.6 0.3 2.0 2.1 3,348 4-6 4.1 5.6 1.8 0.5 1.5 334 8.6 33,333 15.4 34,685 8.9 18.4 6.0 2.6 2.6 3,281 7-9 5.4 5.5 0.8 -0.8 3.2 330 -0.7 31,011 -1.1 30,835 -11.1 11.9 12.5 1.4 1.7 3,250 2003/Jan 7.9 8.1 -5.5 -9.6 10.4 83 -1.7 7,439 18.8 9,521 13.6 0.7 1.7 1,444 Feb 4.7 6.2 -6.6 -10.2 5.4 83 -2.8 7,967 1.4 8,582 -9.9 0.9 1.2 1,454 Mar 4.0 3.3 -5.8 -8.3 5.2 87 -1.9 14,271 11.7 9,068 5.7 0.2 0.6 1,560 Apr 3.0 3.3 -4.3 -4.5 4.9 100 1.4 7,602 4.3 8,534 -5.9 0.3 0.4 1,495 May 1.1 0.9 -3.4 -2.5 2.6 98 -7.7 7,954 12.2 9,119 6.9 0.6 0.4 1,452 Jun 2.6 4.6 -2.8 -3.1 4.2 115 13.4 9,744 12.1 9,087 -0.4 1.6 1.4 1,381 Jul -0.1 0.8 -1.5 0.5 1.5 99 2.6 8,069 6.1 9,232 1.6 -1.3 -0.9 1,377 Aug -1.3 -0.3 -1.8 1.4 -0.5 92 -5.4 7,691 12.2 9,031 -2.2 -0.1 -0.6 1,266 Sep 4.0 5.2 -1.6 -2.7 3.5 98 1.2 12,041 0.6 8,996 -0.4 1.7 1.6 1,212 Oct 3.9 5.6 -2.5 -5.4 4.5 105 1.0 8,917 23.1 10,550 17.3 2.5 2.1 1,368 Nov 2.8 1.4 0.3 3.1 2.5 98 -0.3 8,563 13.4 9,215 -12.7 0.5 0.4 1,114 Dec 5.8 7.9 -2.4 -4.9 5.3 101 9.4 10,288 18.4 9,806 6.4 2.4 2.1 1,132 2004/Jan 5.4 6.4 -4.7 -7.1 4.8 89 7.3 7,213 -3.0 9,296 -5.2 2.5 2.5 1,181 Feb 6.7 5.7 -1.9 -2.5 5.5 85 1.9 8,704 9.3 9,381 0.9 2.7 2.9 1,159 Mar 8.4 8.5 -1.3 -5.2 7.5 93 6.9 14,293 0.2 9,142 -2.5 2.1 2.8 1,329 Apr 8.6 8.3 0.3 -3.4 6.7 96 -4.1 8,889 16.9 9,919 8.5 3.4 3.8 1,236 May 3.8 4.4 -1.3 -1.2 3.1 99 0.9 8,654 8.8 9,914 0.0 1.0 1.3 1,089 Jun 9.1 8.6 -0.8 -5.0 7.2 107 -7.4 10,760 10.4 9,901 -0.1 3.0 3.4 1,078 Jul 6.2 7.4 -3.5 -3.9 4.7 106 7.8 8,093 0.3 9,260 -6.5 3.4 3.2 1,123 Aug 9.6 7.6 -0.8 -2.3 8.4 102 10.5 8,109 5.4 9,524 2.8 2.6 3.5 1,097 Sep 4.0 4.1 0.8 1.1 4.1 108 10.1 12,646 5.0 9,562 0.4 1.6 1.8 1,090 Oct -0.9 -1.3 0.3 4.0 -0.2 106 1.5 8,033 -9.9 9,576 0.1 0.5 0.0 1,124 Nov 4.4 5.1 -0.3 -4.1 5.6 99 0.2 9,857 15.1 10,569 10.4 3.0 2.7 1,064 Dec 1.9 1.1 -0.3 0.2 1.2 99 -2.0 10,193 -0.9 9,586 -9.3 2.4 1.9 1,109 2005/Jan 1.7 0.1 2.4 3.8 1.6 95 6.9 7,556 4.8 9,741 1.6 3.1 2.2 1,022 Feb 1.0 -0.2 3.0 5.0 1.6 85 0.4 9,329 7.2 10,034 3.0 1.5 1.2 1,014 Mar 1.0 1.2 2.5 4.3 1.2 91 -2.7 16,174 13.2 10,433 4.0 2.0 1.7 1,140 Apr -0.1 0.6 0.8 1.8 2.2 97 0.6 9,114 2.5 10,164 -2.6 1.9 1.2 946 May 1.3 -0.4 2.7 3.5 2.6 102 3.0 8,422 -2.7 9,643 -5.1 1.9 1.9 1,072 Jun -0.2 0.4 2.3 2.7 2.1 109 2.4 11,339 5.4 10,338 7.2 1.9 1.6 1,207 Jul -2.6 -2.1 5.0 7.6 -1.3 115 8.3 8,906 10.0 10,203 -1.3 1.3 0.7 1,024 Aug 1.4 3.5 4.1 1.7 1.5 109 7.0 9,197 13.4 10,812 6.0 3.2 2.6 1,152 Sep 0.9 1.4 3.1 3.5 0.8 108 -0.2 13,248 4.8 10,088 -6.7 2.0 1.7 987 Oct 2.1 3.7 2.3 2.1 2.1 116 9.1 8,718 8.5 10,381 2.9 3.2 2.7 1,171 Nov 3.4 4.2 3.7 4.4 2.3 111 12.6 9,878 0.2 10,575 1.9 2.7 2.7 1,114 Dec 3.5 4.4 5.3 6.5 3.3 98 -0.9 11,768 15.5 11,008 4.1 2.2 2.4 1,149 2006/Jan 2.7 4.4 3.5 2.7 1.5 93 -2.2 8,300 9.8 10,670 -2.8 2.3 2.2 1,049 Feb 3.9 5.4 2.8 1.2 2.5 97 13.7 10,093 8.2 10,856 1.5 2.5 2.6 1,044 Mar 3.1 4.1 3.2 2.8 1.3 94 3.9 15,915 -1.6 10,294 -5.2 1.2 1.4 1,255 Apr 3.6 4.8 3.0 2.9 1.0 111 15.0 10,230 12.2 11,404 10.8 2.1 2.3 1,087 May 3.9 6.5 1.3 -1.1 1.5 109 6.7 9,756 15.8 11,167 -2.1 3.6 3.0 1,083 Jun 5.0 5.4 1.8 -0.1 2.1 114 4.7 13,348 17.7 12,114 8.5 2.0 2.2 1,111 Jul 5.1 5.3 0.7 -0.5 2.9 107 -7.5 8,803 -1.2 10,091 -16.7 2.0 2.0 1,051 Aug 5.9 6.3 0.4 -1.7 4.1 111 1.8 9,156 -0.5 10,768 6.7 1.2 1.7 1,169 Sep 5.2 4.7 0.8 -0.3 2.6 112 4.0 13,053 -1.5 9,975 -7.4 1.0 1.6 1,030 Oct 7.4 5.6 3.5 0.3 4.3 118 2.2 8,615 -1.2 10,254 2.8 2.0 2.7 1,166 Nov 4.8 4.9 3.1 0.1 115 4.0 1,091 Notes: Figures in italics are estimates For machinery orders, the number of companies surveyed increased from 178 to 280, and figures for Nippon Telegraph and Telephone (NTT) and the seven Japan Rail (JR) companies we shifted from public to private demand Growth rates of all industries activities (fiscal year, quarterly and monthly) are for all industries except agriculture, forestry and fisheri Sources: Ministry of Economy, Trade and Industry, Ministry of Land, Infrastructure and Transportation, Cabinet Office, Ministry of Finance, Tokyo Shoko Resarch, L Appendix Appendix Table 4: Labor Total cash earnings (manufacturers, 30 employees) Labor force Employed Unemployed Unemployment Active Opening rate Rate Monthly working hours (manufacturers, 30 employees) Nominal Million people CY Quarter Month Million people Million people Seasonally adjusted (%) Seasonally adjusted (x-fold) 1995 66.67 64.57 2.10 3.2 0.63 1996 67.11 64.85 2.25 3.4 0.70 1997 67.87 65.57 2.30 3.4 0.72 1998 67.93 65.14 2.79 4.1 0.53 1999 67.79 64.63 3.17 4.7 0.48 2000 67.67 64.46 3.20 4.7 0.59 2001 67.52 64.12 3.40 5.0 0.59 2002 66.89 63.30 3.59 5.4 0.54 2003 66.66 63.16 3.50 5.3 0.64 2004 66.42 63.29 3.13 4.7 0.83 2005 66.51 63.56 2.94 4.4 0.95 2000/1-3 66.65 63.37 3.28 4.8 0.52 4-6 68.14 64.82 3.32 4.7 0.57 7-9 67.96 64.83 3.12 4.7 0.61 10-12 67.90 64.83 3.07 4.8 0.65 2001/1-3 66.90 63.64 3.26 4.7 0.64 4-6 68.00 64.55 3.45 4.9 0.61 7-9 67.72 64.30 3.41 5.1 0.58 10-12 67.45 63.99 3.46 5.4 0.53 2002/1-3 66.19 62.59 3.60 5.3 0.52 4-6 67.15 63.42 3.72 5.4 0.52 7-9 67.13 63.54 3.59 5.4 0.54 10-12 66.63 63.19 3.44 5.4 0.57 2003/1-3 65.72 62.09 3.63 5.4 0.60 4-6 67.20 63.47 3.73 5.4 0.61 7-9 66.90 63.50 3.40 5.2 0.64 10-12 66.35 63.10 3.25 5.0 0.73 2004/1-3 65.53 62.24 3.29 4.9 0.77 4-6 66.81 63.60 3.21 4.6 0.80 7-9 66.81 63.67 3.14 4.8 0.83 10-12 66.04 63.14 2.90 4.6 0.91 2005/1-3 65.41 62.36 3.05 4.6 0.91 4-6 66.88 63.89 2.99 4.3 0.95 7-9 66.90 64.05 2.86 4.3 0.97 10-12 66.31 63.44 2.87 4.5 0.99 2006/1-3 65.57 62.70 2.86 4.2 1.03 4-6 66.85 64.05 2.80 4.1 1.06 7-9 66.87 64.13 2.73 4.1 1.08 2003/Jan 65.60 62.03 3.57 5.5 0.58 Feb 65.42 61.92 3.49 5.3 0.59 Mar 66.49 62.66 3.84 5.4 0.60 Apr 66.91 63.06 3.85 5.4 0.61 May 67.36 63.61 3.75 5.4 0.61 Jun 67.72 64.11 3.61 5.3 0.62 Jul 67.23 63.81 3.42 5.2 0.63 Aug 66.94 63.61 3.33 5.1 0.65 Sep 66.92 63.45 3.46 5.1 0.67 Oct 66.80 63.38 3.43 5.1 0.70 Nov 66.54 63.23 3.30 5.1 0.73 Dec 66.07 63.07 3.00 4.9 0.75 2004/Jan 65.44 62.21 3.23 5.0 0.76 Feb 65.39 62.08 3.30 5.0 0.76 Mar 66.12 62.78 3.33 4.7 0.76 Apr 66.88 63.54 3.35 4.7 0.78 May 67.08 63.88 3.19 4.6 0.79 Jun 66.83 63.74 3.09 4.6 0.83 Jul 66.91 63.73 3.18 4.9 0.84 Aug 67.09 63.96 3.14 4.8 0.84 Sep 66.78 63.69 3.09 4.6 0.86 Oct 66.63 63.52 3.11 4.6 0.89 Nov 66.12 63.22 2.90 4.6 0.91 Dec 65.76 63.06 2.70 4.5 0.90 2005/Jan 65.57 62.61 2.96 4.5 0.91 Feb 65.32 62.24 3.08 4.7 0.91 Mar 65.73 62.60 3.13 4.5 0.91 Apr 66.62 63.52 3.10 4.4 0.94 May 67.42 64.35 3.07 4.4 0.94 Jun 66.98 64.18 2.80 4.2 0.96 Jul 66.99 64.10 2.89 4.4 0.97 Aug 66.89 64.05 2.84 4.3 0.97 Sep 67.22 64.37 2.85 4.2 0.97 Oct 67.13 64.09 3.04 4.5 0.98 Nov 66.36 63.44 2.92 4.6 0.99 Dec 65.80 63.15 2.65 4.4 1.00 2006/Jan 65.61 62.69 2.92 4.5 1.03 Feb 65.49 62.72 2.77 4.1 1.04 Mar 65.97 63.08 2.89 4.1 1.01 Apr 66.52 63.68 2.84 4.1 1.04 May 67.25 64.48 2.77 4.0 1.07 Jun 67.17 64.38 2.78 4.2 1.08 Jul 66.88 64.21 2.68 4.1 1.09 Aug 66.99 64.27 2.72 4.1 1.08 Sep 67.11 64.31 2.80 4.1 1.08 Oct 67.18 64.37 2.81 4.2 1.06 Nov 66.69 64.10 2.59 4.0 1.06 Note: Figures in italics are estimates Sources: Ministry of Public Management, Home Affairs, Posts and Telecommunication Ministry of Health, Labor and Welfare Real YoY change (%) YoY change (%) 3.3 2.5 2.8 -1.1 -1.0 2.0 0.0 -1.2 2.4 1.8 0.8 2.4 2.7 1.7 1.6 0.5 0.9 -0.1 -1.2 -1.1 -1.1 -2.5 -0.3 1.9 3.2 2.3 2.5 1.9 1.8 2.0 1.3 0.5 0.5 0.4 1.6 0.3 1.6 0.9 1.1 1.9 2.7 1.8 2.4 4.5 3.7 0.8 1.4 2.4 0.7 3.3 1.2 2.0 2.2 1.2 2.2 1.8 1.7 2.8 1.6 0.4 3.5 0.8 0.0 0.1 1.3 0.8 0.1 0.5 2.5 -2.7 -0.1 0.4 2.7 1.6 -0.2 1.0 0.0 1.7 0.5 2.6 0.8 0.8 1.0 1.1 0.4 Appendix 3.6 2.5 1.2 -1.7 -0.6 3.0 0.9 -0.1 2.8 1.7 1.2 3.2 3.5 2.5 2.5 1.1 1.9 0.9 0.1 0.6 0.0 -1.6 0.2 2.2 3.4 2.7 3.0 1.9 2.1 2.0 0.7 0.7 0.6 0.9 2.5 -0.1 0.9 -0.4 1.6 2.3 2.9 1.8 2.8 5.0 4.0 1.3 1.6 2.5 1.4 3.7 1.5 2.0 2.3 1.8 2.7 1.8 2.0 2.9 1.6 -0.2 2.5 0.5 0.0 0.5 1.4 0.7 -0.1 1.1 2.8 -2.3 0.4 1.3 3.8 2.0 -0.8 0.6 -0.2 1.3 -0.1 1.5 -0.1 -0.8 -0.2 0.1 -0.3 Total 164.0 165.8 165.5 162.7 161.9 164.7 162.9 163.8 165.6 167.7 166.8 159.9 165.6 163.8 169.7 159.0 164.4 161.6 166.6 156.5 164.5 164.7 169.5 160.2 166.9 165.3 170.4 164.0 168.9 167.8 170.1 162.0 167.8 166.9 170.6 163.8 169.0 167.6 149.0 167.1 164.6 168.8 159.8 172.0 172.4 156.7 166.7 171.2 171.9 168.2 151.1 168.8 172.2 176.8 156.1 173.7 174.1 159.9 169.4 167.9 172.8 169.7 151.4 166.3 168.3 175 154.4 173.9 172.1 159.6 169 167.6 172.8 171.3 151.0 169.9 170.5 175.1 156.2 175.6 172.5 160.6 169.8 169.2 174 Unscheduled 13.3 14.8 15.9 13.5 13.5 15.4 14.1 15.3 16.9 17.8 17.7 14.7 15.0 15.4 16.4 15.1 14.1 13.5 13.5 13.9 15.0 15.6 16.6 16.2 16.3 16.9 18.3 17.5 17.7 17.7 18.2 17.4 17.4 17.5 18.5 18.1 18.2 18.2 15.1 16.6 17.0 16.8 15.8 16.4 16.9 16.5 17.3 18.0 18.4 18.5 16.2 17.9 18.4 18.2 17.0 17.8 17.8 17.3 18.0 18.2 18.3 18.1 16.3 17.7 18.1 18.0 16.6 17.6 17.7 17.2 17.7 18.3 18.6 18.7 16.9 18.5 18.9 18.9 17.5 18.2 18.5 17.7 18.3 18.6 19.0 YoY change (%) 10.7 9.7 7.7 -15.2 0.6 14.8 -7.9 4.2 10.4 7.5 -0.3 14.9 16.9 14.8 13.0 3.1 -5.4 -11.1 -17.0 -11.8 2.6 10.5 17.5 16.6 8.6 8.3 10.2 8.0 8.6 6.0 -0.5 -0.6 -1.7 -0.9 1.8 4.2 4.6 3.6 19.5 17.2 13.4 9.1 8.4 7.3 8.5 8.0 7.6 9.4 9.1 9.6 10.0 10.6 11.1 10.6 9.9 11.5 7.6 7.1 6.4 4.0 2.3 0.2 0.7 -1.0 -1.6 -1.1 -2.4 -1.1 -0.5 -0.5 -1.6 0.5 1.6 3.4 3.6 4.5 4.5 5.0 5.5 3.5 4.5 2.9 3.3 1.6 2.2 Appendix Table 5: Prices and Money Market Rates Consumer prices Corporate Export price goods price Import price Call rate General YoY change (%) CY Quarter Month YoY change (%) YoY change (%) Loans and discounts by Exchange rate Excluding fresh food YoY change YoY change (%) (%) Average Yen / U.S dollar Arbitrated rate Yen / Euro 10-year domestic banks Nikkei 225 government (end-period stock average bonds yield outstanding amounts) Uncollateralized overnight rate End-period rate billion yen 1995 -0.8 -2.2 -0.1 -0.1 0.0 94.06 135.14 1.210 3.190 4,863,560 1996 -1.6 4.8 9.7 0.1 0.1 108.79 145.35 0.470 2.760 4,882,907 1997 0.7 1.9 7.5 1.8 1.9 121.00 143.49 0.480 1.910 4,930,232 1998 -1.5 1.3 -4.9 0.7 0.3 130.90 132.80 0.370 1.970 4,888,201 1999 -1.5 -10.1 -9.2 -0.3 -0.1 113.91 102.92 0.060 1.645 4,688,104 2000 0.0 -4.7 4.7 -0.8 -0.4 107.75 107.87 0.110 1.640 4,639,163 2001 -2.3 3.1 2.5 -0.7 -0.8 121.53 117.32 0.059 1.365 4,482,233 2002 -2.0 -1.2 -1.5 -1.0 -0.9 124.64 125.72 0.002 0.900 4,316,425 2003 -0.8 -4.0 -0.9 -0.2 -0.3 115.93 134.91 0.001 1.360 4,138,534 2004 1.3 -1.4 4.2 0.0 -0.1 108.18 140.96 0.001 1.435 4,040,009 2005 1.7 2.0 13.1 -0.3 -0.1 110.16 137.21 0.001 1.470 4,085,506 2000/1-3 0.6 -5.3 6.5 -0.7 -0.3 107.07 103.95 0.020 1.770 4,634,849 4-6 0.4 -7.8 1.7 -0.7 -0.2 106.61 98.97 0.020 1.760 4,533,347 7-9 0.0 -4.4 3.6 -0.7 -0.2 107.57 97.08 0.140 1.840 4,601,591 10-12 -0.7 -0.9 7.0 -0.9 -0.8 109.82 99.02 0.250 1.640 4,639,163 2001/1-3 -1.9 3.1 4.0 -0.5 -0.8 118.09 108.30 0.200 1.270 4,569,652 4-6 -2.0 4.4 6.6 -0.8 -1.0 122.64 105.15 0.020 1.210 4,472,873 7-9 -2.5 2.8 2.2 -0.8 -0.9 121.76 108.63 0.008 1.420 4,505,649 10-12 -2.8 2.0 -2.8 -1.0 -0.8 123.65 112.63 0.002 1.365 4,482,233 2002/1-3 -2.6 1.7 -1.7 -1.4 -0.8 132.46 115.42 0.001 1.400 4,406,096 4-6 -2.2 -1.4 -2.8 -0.9 -0.9 127.05 116.38 0.001 1.315 4,318,420 7-9 -2.0 -3.6 -3.6 -0.8 -0.9 119.19 117.72 0.003 1.175 4,262,056 10-12 -1.3 -1.2 2.7 -0.5 -0.8 122.54 122.73 0.002 0.900 4,316,425 2003/1-3 -0.9 -6.3 0.5 -0.2 -0.7 118.83 128.54 0.002 0.700 4,232,858 4-6 -1.1 -3.1 -1.3 -0.3 -0.4 118.44 136.94 0.001 0.820 4,123,578 7-9 -0.7 -0.3 2.2 -0.2 -0.1 117.57 131.01 0.002 1.380 4,137,209 10-12 -0.4 -6.4 -4.9 -0.3 0.0 108.89 130.84 0.001 1.360 4,138,534 2004/1-3 0.1 -3.8 -2.8 -0.1 0.0 107.22 131.92 0.005 1.435 4,116,938 4-6 1.1 -3.3 3.9 -0.3 -0.2 109.69 132.58 0.002 1.780 4,017,865 7-9 1.8 -0.8 6.3 -0.1 -0.2 109.91 135.42 0.005 1.440 4,044,004 10-12 2.0 2.8 9.5 0.5 -0.2 105.89 137.68 0.002 1.435 4,040,009 2005/1-3 1.4 0.6 6.8 0.0 -0.1 104.47 137.81 0.022 1.370 4,019,572 4-6 1.7 0.9 10.8 -0.1 0.0 107.63 134.61 0.001 1.165 3,954,656 7-9 1.7 1.0 13.7 -0.3 -0.2 111.24 136.59 0.001 1.475 4,041,190 10-12 2.2 5.1 21.1 -0.7 -0.1 117.29 139.84 0.001 1.470 4,085,506 2006/1-3 2.8 5.0 23.5 -0.1 0.0 116.88 141.42 0.001 1.770 4,107,589 4-6 3.1 4.3 16.4 0.2 0.0 114.38 145.07 0.019 1.920 4,084,899 7-9 3.5 5.7 17.2 0.6 0.3 116.19 148.69 0.222 1.670 4,125,815 2003/Jan -1.0 -6.7 -1.2 -0.4 -0.8 118.65 127.74 0.002 0.810 4,272,715 Feb -0.8 -6.3 0.8 -0.2 -0.7 119.27 126.92 0.001 0.780 4,247,986 Mar -0.8 -6.1 2.0 -0.1 -0.6 118.57 130.96 0.002 0.700 4,232,858 Apr -0.8 -5.0 -1.1 -0.1 -0.4 119.79 133.71 0.001 0.610 4,156,005 May -1.1 -3.2 -2.5 -0.2 -0.4 117.26 139.25 0.001 0.530 4,133,853 Jun -1.3 -1.1 -0.1 -0.4 -0.4 118.26 137.85 0.001 0.820 4,123,578 Jul -0.8 1.0 3.4 -0.2 -0.2 118.69 134.88 0.002 0.925 4,095,503 Aug -0.7 0.5 3.4 -0.3 -0.1 118.83 128.59 0.001 1.470 4,114,743 Sep -0.6 -2.5 -0.1 -0.2 -0.1 115.19 129.55 0.002 1.380 4,137,209 Oct -0.5 -6.9 -6.3 0.0 0.1 109.58 126.26 0.001 1.465 4,086,598 Nov -0.5 -6.0 -4.7 -0.5 -0.1 109.20 131.35 0.001 1.310 4,114,304 Dec -0.2 -6.3 -3.6 -0.4 0.0 107.90 134.91 0.001 1.360 4,138,534 2004/Jan 0.0 -4.6 -2.6 -0.3 -0.1 106.48 131.95 0.000 1.320 4,108,071 Feb 0.0 -4.3 -3.8 0.0 0.0 106.55 135.61 0.001 1.220 4,098,286 Mar 0.2 -2.7 -2.0 -0.1 -0.1 108.62 128.21 0.001 1.435 4,116,938 Apr 0.6 -5.3 -0.4 -0.4 -0.2 107.25 131.96 0.000 1.535 4,044,596 May 0.9 -1.2 6.7 -0.5 -0.3 112.35 133.78 0.001 1.525 4,025,947 Jun 1.5 -3.4 5.5 0.0 -0.1 109.47 132.00 0.001 1.780 4,017,865 Jul 1.7 -2.3 4.9 -0.1 -0.2 109.36 134.85 0.000 1.850 4,030,259 Aug 1.7 -1.1 5.3 -0.2 -0.2 110.35 133.59 0.001 1.535 4,020,628 Sep 1.9 1.0 8.8 0.0 0.0 110.01 137.83 0.001 1.440 4,044,004 Oct 2.1 4.3 11.7 0.5 -0.1 108.92 135.27 0.001 1.490 4,009,638 Nov 2.1 2.5 9.5 0.8 -0.2 104.90 136.81 0.001 1.445 4,005,789 Dec 1.9 1.8 7.4 0.2 -0.2 103.84 140.96 0.001 1.435 4,040,009 2005/Jan 1.4 0.6 5.7 -0.1 -0.3 103.21 135.19 0.001 1.320 4,003,234 Feb 1.3 1.0 7.6 -0.3 -0.4 104.88 139.02 0.001 1.470 4,004,578 Mar 1.4 0.4 7.0 -0.2 -0.3 105.31 139.22 0.001 1.320 4,019,572 Apr 1.9 3.5 13.9 0.0 -0.2 107.36 136.80 0.001 1.240 3,989,337 May 1.8 -1.3 9.0 0.2 0.0 106.91 133.47 0.001 1.245 3,955,800 Jun 1.4 0.8 9.5 -0.5 -0.2 108.63 133.56 0.001 1.165 3,954,656 July 1.6 1.9 14.2 -0.3 -0.2 111.93 136.11 0.001 1.305 3,987,936 Aug 1.8 0.5 13.1 -0.3 -0.1 110.72 137.23 0.001 1.335 3,984,720 Sep 1.8 0.6 13.6 -0.3 -0.1 111.06 136.44 0.001 1.475 4,041,190 Oct 2.1 2.3 18.2 -0.7 0.0 114.82 138.78 0.001 1.545 4,019,510 Nov 2.0 6.0 21.8 -0.8 0.1 118.41 141.04 0.001 1.445 4,041,879 Dec 2.3 6.7 23.3 -0.1 0.1 118.64 139.70 0.001 1.470 4,085,506 2006/Jan 2.7 5.3 23.2 -0.1 -0.1 115.45 143.11 0.001 1.560 4,053,694 Feb 3.0 5.4 25.0 -0.1 0.0 117.89 138.63 0.001 1.585 4,050,012 Mar 2.7 4.3 22.4 -0.2 0.1 117.31 142.51 0.002 1.770 4,107,589 Apr 2.6 4.0 15.1 -0.1 -0.1 117.11 144.29 0.002 1.920 4,078,941 May 3.3 3.8 15.5 0.1 0.0 111.51 144.04 0.020 1.830 4,069,931 Jun 3.4 5.0 18.5 0.5 0.2 114.53 146.89 0.036 1.920 4,084,899 July 3.4 4.7 16.0 0.3 0.2 115.67 146.53 0.155 1.915 4,094,659 Aug 3.5 5.8 18.3 0.9 0.3 115.88 150.09 0.250 1.620 4,097,216 Sep 3.6 6.8 17.3 0.6 0.2 117.01 149.45 0.261 1.670 4,125,815 Oct 2.8 5.2 12.0 0.4 0.1 118.66 150.27 0.254 1.720 4,088,763 Nov 2.7 2.6 7.7 0.3 0.2 117.35 154.36 0.257 Notes: Figures in italics are estimates Figures prior to third quarter 1998 is longest-term yield of 10-year Japanese government bonds on Tokyo Stock Exchang Bank loans and discounts are based on old standard to September 1993 and new standard from October 1993 Nikkei 225 stock average figures are averaged month-end prices Sources: Bank of Japan, Ministry of Public Management, Home Affiars, Posts and Telecommunications, Nihon Keizai Shimbun, In Appendix Yen 17,298 21,011 18,293 15,276 16,949 16,905 11,987 10,067 9,290 11,232 16,111 19,946 17,239 16,112 14,325 13,242 13,389 10,783 10,535 10,537 11,293 9,627 8,812 8,225 8,446 10,042 10,446 11,180 11,619 11,077 11,053 11,593 11,584 13,574 16,111 17,060 15,505 16,128 8,340 8,363 7,973 7,831 8,425 9,083 9,563 10,344 10,219 10,560 10,101 10,677 10,784 11,042 11,715 11,762 11,236 11,859 11,326 11,082 10,824 10,771 10,899 11,489 11,388 11,741 11,669 11,009 11,277 11,584 11,900 12,414 13,574 13,607 14,872 16,111 16,650 16,205 17,060 16,906 15,467 15,505 15,457 16,141 16,128 16,399 16,274 Appendix Table 6: Trade Indices Trade (customs clearance basis) Balance of Payments Value of Exports Quarter Month Quantity of Exports Quantity of Imports Balance Trade Balance Current Accounts Billion US dollar CY Value of Imports Billion US dollar YoY Change(％) YoY Change(％) Billion US dollar Billion US dollar Billion US dollar Reserves (period-end balance) Oil Imports Oil Price Million US dollar Million barrels US dollar / barrel 1995 443 336 107 132 111 182,820 1,660 18.0 1996 412 351 62 84 66 217,867 1,645 20.4 1997 423 340 83 102 97 220,792 1,687 20.7 1998 386 279 107 122 119 215,949 1,605 13.9 1999 417 310 2.1 9.6 108 123 114 288,080 1,577 17.1 2000 481 381 9.4 11.0 100 117 120 361,638 1,571 28.5 2001 405 351 -9.5 -2.0 54 70 88 401,959 1,545 25.3 2002 416 337 8.0 2.0 79 94 113 469,728 1,484 24.6 2003 470 382 4.9 7.1 88 106 136 673,529 1,566 29.2 2004 565 455 10.6 7.0 110 132 172 844,543 1,542 36.4 2005 598 519 0.8 2.9 80 95 166 846,897 1,565 51.1 2000/1-3 116 90 13.3 11.1 26 30 33 305,512 409 26.2 4-6 119 92 13.1 11.9 27 31 32 344,846 372 26.6 7-9 123 96 8.5 10.9 27 32 33 348,948 377 29.2 10-12 123 104 3.4 9.8 19 24 23 361,638 413 31.9 2001/1-3 109 95 -4.2 5.0 14 19 26 361,472 419 25.6 4-6 100 88 -10.1 -0.8 12 16 18 362,666 364 26.5 7-9 98 84 -12.0 -5.1 15 18 22 397,015 369 26.6 10-12 98 85 -11.3 -6.1 13 17 22 401,959 394 22.6 2002/1-3 94 77 -2.7 -5.6 17 20 33 401,518 370 19.9 4-6 101 80 8.7 0.5 21 24 28 446,198 339 24.8 7-9 108 88 11.7 7.9 21 24 29 460,725 367 26.3 10-12 113 92 14.4 5.5 21 25 24 469,728 408 27.3 2003/1-3 109 92 7.5 8.2 17 21 30 496,181 426 30.6 4-6 113 93 2.6 8.4 20 24 32 545,618 381 28.5 7-9 117 94 2.3 5.0 23 27 38 604,873 371 28.4 10-12 131 102 7.3 7.1 29 34 36 648,122 389 29.3 2004/1-3 135 107 13.1 9.0 28 33 47 826,577 400 31.4 4-6 138 110 13.9 6.6 29 34 41 817,951 351 34.9 7-9 142 115 12.0 6.6 27 33 44 830,992 386 38.5 10-12 150 123 4.1 5.8 27 32 39 844,543 405 40.5 2005/1-3 144 122 -2.0 3.1 23 26 45 837,718 388 40.7 4-6 147 128 -1.0 3.6 20 24 38 839,378 366 49.7 7-9 151 133 0.9 4.1 17 22 43 843,563 406 56.1 10-12 156 136 5.1 0.7 20 23 41 846,897 405 57.3 2006/1-3 151 138 11.2 5.5 13 17 47 852,030 404 59.5 4-6 158 142 8.8 4.5 16 19 35 864,878 383 64.9 7-9 166 149 8.4 2.9 18 20 46 881,273 384 70.7 2003/Jan 32 31 10.0 10.9 478,593 137 28.3 Feb 36 29 10.0 4.1 12 485,265 145 30.6 Mar 41 33 3.6 9.3 10 14 496,181 144 32.6 Apr 39 32 6.5 7.5 11 499,442 131 30.9 May 36 31 2.8 4.4 12 543,088 126 27.4 Jun 38 31 -1.3 13.7 10 545,618 124 27.1 Jul 39 33 2.4 4.5 13 556,836 127 27.6 Aug 36 30 0.0 -0.3 12 555,088 128 28.4 Sep 41 32 4.4 10.8 11 14 604,873 116 29.2 Oct 44 34 7.4 8.9 10 11 11 626,269 125 27.9 Nov 42 33 1.7 3.2 11 14 644,569 116 29.5 Dec 46 35 12.9 9.2 10 12 11 673,529 148 30.3 2004/Jan 40 35 13.1 5.7 10 741,246 138 30.9 Feb 45 32 12.1 3.0 13 15 20 776,857 126 31.9 Mar 50 40 14.1 17.5 10 12 17 826,577 136 31.6 Apr 48 38 13.2 10.2 10 12 15 814,969 140 33.5 May 43 34 10.6 -0.3 10 15 816,848 102 34.4 Jun 48 37 17.9 10.0 10 12 12 817,951 109 37.1 Jul 49 38 13.2 3.7 10 13 15 819,203 127 36.7 Aug 43 38 11.1 13.1 13 827,954 139 37.7 Sep 50 39 11.5 3.7 11 13 16 830,992 120 41.3 Oct 50 39 4.4 0.6 11 12 12 837,878 130 39.9 Nov 48 43 5.3 14.6 12 840,087 129 41.9 Dec 52 41 2.7 2.8 11 13 16 844,543 146 39.9 2005/Jan 43 41 -3.1 3.0 840,966 130 38.4 Feb 47 36 -4.3 5.3 10 12 20 840,564 121 41.2 Mar 55 45 1.1 1.5 11 11 17 837,718 137 42.6 Apr 51 43 -1.4 0.0 10 15 843,601 123 48.6 May 45 43 -2.4 9.4 13 842,468 118 51.2 Jun 51 43 0.5 2.0 10 843,537 125 49.5 Jul 50 42 -0.8 -0.6 15 839,378 128 53.3 Aug 47 46 2.2 9.1 11 847,766 140 55.5 Sep 54 45 1.4 3.9 10 17 843,563 138 59.4 Oct 52 45 2.4 2.3 13 841,792 126 59.9 Nov 51 46 6.6 -2.1 12 843,268 131 57.6 Dec 53 45 6.2 2.1 16 846,897 148 54.8 2006/Jan 43 46 7.5 6.9 -3 -2 851,666 133 56.4 Feb 50 42 14.6 5.4 20 850,058 135 61.1 Mar 58 50 11.1 4.2 21 852,030 137 61.0 Apr 52 47 6.3 4.8 11 860,242 147 61.3 May 50 47 11.6 4.4 4 15 864,112 115 66.5 Jun 56 49 8.7 4.3 864,878 121 67.8 Jul 55 47 5.9 4.0 16 871,938 120 68.0 Aug 53 51 12.0 2.2 13 878,748 137 71.8 Sep 59 50 7.5 2.5 10 17 881,273 127 72.1 Oct 56 51 1.6 7.9 13 885,554 118 64.4 Nov 56 48 4.0 2.5 896,949 116 59.8 Notes: Figures in italics are estimates Quantum index of export and import use year 2000 as base As well, because retroaction of monthly index of the 2000 standar can be obtained after January 1998, changes from previous year of the fiscal index are made after 1999 through the average o the monthly index corresponded Current accounts have changed interest rates associated with derivative from balance on income to financial accoun Appendix Appendix Table 7: Business Indices Tankan Large Large manufactur nonmanufa ers cturers Quarter 1998/1-3 4-6 7-9 10-12 1999/1-3 4-6 7-9 10-12 2000/1-3 4-6 7-9 10-12 2001/1-3 4-6 7-9 10-12 2002/1-3 4-6 7-9 10-12 2003/1-3 4-6 7-9 10-12 2004/1-3 4-6 7-9 10-12 2005/1-3 4-6 7-9 10-12 2006/1-3 4-6 7-9 10-12 2007/1-3 -23 -35 -45 -49 -47 -37 -22 -17 -9 10 10 -5 -16 -33 -38 -38 -18 -14 -9 -10 -5 12 22 26 22 14 18 19 21 20 21 24 25 22 -36 -33 -39 -39 -34 -28 -23 -19 -16 -12 -9 -10 -13 -13 -17 -22 -22 -16 -13 -16 -14 -13 -13 11 11 11 15 15 17 18 20 20 22 20 Index of Business Conditions Leading index Month 2003/Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2004/Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005/Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2006/Jan Feb Mar Apr May Jun Jul Aug Sep Oct Coincident Index 58.3 50.0 41.7 45.8 58.3 66.7 50.0 58.3 66.7 83.3 66.7 66.7 58.3 83.3 75.0 66.7 75.0 66.7 75.0 62.5 33.3 33.3 33.3 41.7 54.2 25.0 41.7 45.8 50.0 66.7 58.3 100.0 41.7 66.7 50.0 75.0 79.2 83.3 50.0 50.0 79.2 58.3 33.3 25.0 25.0 54.5 Notes: Figures in italics are estimates Tankan for Q2 2004 means indexes for the future Although the Tankan criteria were changed, figures here are based on the previous criteria because the revised time-series data were not announced Sources: Bank of Japan, Cabinet Office Appendix 100.0 81.8 86.4 18.2 63.6 54.5 81.8 54.5 90.9 100.0 81.8 90.9 90.9 72.7 63.6 54.5 81.8 90.9 95.5 90.9 36.4 9.1 36.4 27.3 90.9 36.4 72.7 63.6 63.6 100.0 45.5 81.8 54.5 81.8 63.6 90.9 77.3 45.5 9.1 81.8 81.8 90.9 77.3 81.8 50.0 75.0 Lagging index 50.0 66.7 83.3 100.0 66.7 66.7 50.0 66.7 66.7 91.7 66.7 83.3 100.0 83.3 66.7 83.3 83.3 83.3 66.7 66.7 100.0 66.7 83.3 66.7 83.3 58.3 75.0 83.3 83.3 83.3 58.3 83.3 50.0 83.3 58.3 66.7 75.0 83.3 66.7 100.0 83.3 83.3 58.3 33.3 58.3 20.0 This report, compiled primarily to provide information to readers outside of Japan, may be accessed on the JETRO Web site at www.jetro.go.jp/en/ The contents are based on information available as of December 28, 2006 Neither this report nor any part of it may be reproduced or transmitted in any form or by any means — electronic, mechanical, photocopying, recording or otherwise — without the prior permission of JETRO All information has been verified to the best of the writers’ and publisher’s abilities However, JETRO does not accept responsibility for any loss arising from any use of this report Contact: +81-3-3582-5178 ... Manufacturing Production Sustains High Levels Mining and manufacturing output maintained an overall upward trend in 2006, sustained by a steady recovery in the materials industries Robust increases in. .. 2007 1) Mining and Manufacturing Seen Gradually Improving While rising inventories are cause for concern, production, shipment and inventory indices suggest that mining and manufacturing inventories... Source: Ministry of Economy, Trade and Industry Mining and manufacturing inventories increased steadily overall in the latter half of 2006 As pressure for cutbacks in electronic components and devices