Sunday, July 19, 2009

Japanese unemployment hits five-year high

TOKYO (AFP) — Japan's unemployment rate rose to its highest level in more than five years as firms slashed jobs to cope with the worst recession since World War II, government data showed Tuesday.On a brighter note, consumer spending rose for the first time in 16 months, supported by the government's economic stimulus efforts.
The unemployment rate climbed to 5.2 percent in May -- a level last seen in September 2003 -- up from 5.0 in April, the internal affairs ministry said.

Hopes are mounting that Japan's economy has come through the worst of its export and production slump, but there are fears that unemployment will rise further as companies seek to recover from heavy financial losses.The jobless rate, which was slightly worse than expected, is close to a post-World War II high of 5.5 percent, which was last seen in April 2003.

The number of people in unemployment rose by 770,000, or 28.5 percent, from a year earlier to 3.47 million.

Many Japanese companies, particularly exporters, have moved swiftly to cut jobs and production in response to a slump in demand caused by the global economic downturn.

There were only 44 job offers for every 100 job seekers in May, a record low and down from 46 in April, a separate report from the labour ministry showed.

But some analysts expressed optimism that the jobs market situation may start to stabilise before long.

"The jobless rate worsened slightly but is almost peaking out," said Hideyuki Araki, an economist at the Resona Research Institute.

"We are not in a vicious spiral of higher unemployment prompting consumers to tighten their purse strings, further damaging corporate earnings," he said.

But others are more pessimistic.

The unemployment rate is likely to approach six percent by mid-2010, warned Morgan Stanley economist Takehiro Sato.

Despite the worsening jobs market, Japanese household spending edged up 0.3 percent in May from a year earlier, marking the first increase in 16 months, government data showed Tuesday.

Consumer spending is being propped up by the government's economic stimulus measures, but the boost will eventually fade, said UBS economist Takuji Aida.

Spending will show "only a slight rise" in the July-September quarter because of a weak jobs market and sluggish wages, he said.

The government has announced a series of emergency spending packages to revive Asia's biggest economy, including cash handouts for households and incentives to buy fuel-efficient cars.

Other data underscored the weak state of the Japanese economy. Construction orders received by major 50 companies in May plunged 41.9 percent from a year earlier, the steepest drop since comparable records began in 1985.

Housing starts fell 30.8 percent in May from a year earlier, after a 32.4 percent drop in April that was the worst since 1974.

Japan entered recession in the second quarter of 2008 as its heavy reliance on overseas markets as an engine of economic growth left it vulnerable to the fallout from the global economic crisis.

The economy suffered its worst contraction in the first quarter of 2009 since comparable records began in 1955, shrinking at an annualised pace of 14.2 percent.

Experts say a full-fledged recovery is unlikely in Japan until demand picks up in major overseas markets such as the United States and Europe.

Reflecting the tough conditions facing many companies, the government said Tuesday it would invest 30 billion yen (310 million dollars) in troubled chipmaker Elpida Memory Inc as part of a 160-billion-yen rescue package.

Wednesday, January 21, 2009

20,000 strictly Japanese jobs in India available

This is indeed a validation that Japanese jobs in India are coming and quite many of them. JETRO projects a USD 2 Billion investment over next three years and it can only mean good news for professionals in this sector. Here is the excerpt from Economic Times today. Balle Balle like they say - Great begining to the year. Editor
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JAPANESE COS TO INVEST $2 B IN INDIA

Top Japanese companies will invest around $2 billion in India over the next three years, as they seek to address lucrative and growing markets such as India, according to Japan External Trade Organisation (Jetro). Kazumasa Kuboki, director general of Jetro, said last week that the Japanese companies in the software and telecom sectors would also create around 20,000 jobs in the country.

“Japanese companies have to survive and India is ranked number one in terms of domestic market and there is availability of man power,” he said.

Experts at consulting firm Zinnov Management admitted that Japan needs to explore India’s talent pool, because the country is facing a shortage of skilled professionals.

“R&D offshoring from Japan will increase. We know 3-5 companies which are billion dollar plus organistions and are exploring opportunities to partner with Indian service providers or set up their own shop this year”, Chandramouli CS, director of Zinnov said.

He added that Japanese companies in the sectors of automobile components, pharmaceuticals and manufacturing are currently evaluating investment opportunities in India.

Thursday, January 15, 2009

Nissan cuts Japan production amid reports of loss

Report in AP today confirms the deep rooted problems faced by Japanese auto makers. Keep a close look out to see how the Japanese mind deals with such issues. No knee jerk reactions like the Americans. Editor
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Nissan Motor Co said on Thursday it is slashing domestic production by 64,000 vehicles in February and March to trim inventories and adjust to a continuing drastic slide in global demand.

The bad news comes on the heels of media reports on Thursday that said Japan's No 3 automaker is likely to post an operating loss in the fiscal year through March, joining a growing list of big Japanese corporate names expected to slide into the red. Since September, Nissan has already announced, over several times, domestic production cuts that combine to a reduction of 225,000 vehicles, spokeswoman Haruko Wada said. The company had initially expected to produce 1.38 million vehicles in Japan for the fiscal year.

Like other exporters, Nissan has been hammered by the double blow of falling overseas sales stemming from the global financial crisis and the stronger yen, which erodes foreign income. The latest reports follow dismal forecasts from top automaker Toyota Motor Corp, which projected last month a 150 billion yen ($1.69 billion) operating loss for the fiscal year ending March 31 _ its first such red ink in 70 years.

Earlier this week, media reports and analysts predicted Sony Corp would also report an operating loss this fiscal year. Sony did not comment.

Operating profit is seen as a direct indicator of core business performance while net profit reflects taxes, dividends, asset sales and other items.

The Yomiuri, the nation's top-selling newspaper, and Kyodo News agency reported Nissan would sink into operating losses for the fiscal year through March.

That would mark its first operating loss under Chief Executive Carlos Ghosn, the outspoken executive who has led a turnaround at Nissan after arriving from alliance partner Renault SA of France in 1999.

Tokyo-based Nissan, which makes the Z sportscar and Infiniti luxury models, said in a release the reports were not based on an announcement, but did not deny they could post a loss. To reduce Japan production, Nissan is halting production in February for 13 days at its Tochigi plant, 11 days in Kyushu and 9.5 days at Oppama, it said. Plans for March were still undecided. Toyota and Honda Motor Co have also reduced production in Japan, laying off thousands of temporary assembly line workers. In yet another painful sign of troubled times, Nissan said last week it will slash its British work force by 1,200. Nissan now employs about 5,000 people at its plant in Sunderland, northern England.

Japanese exporters have been pinched as the dollar has slid from about 110 yen a year ago to below 90 yen in recent weeks. For every yen the dollar falls, Nissan can expect to lose 14.5 billion yen, according to the company. Losses related to currency fluctuations are worse for Toyota because it has bigger North American sales. In October, Nissan drastically cut its forecasts for the fiscal year through March, slashing its operating profit target to 270 billion yen from 550 billion yen.

Global demand has continued to fall since then. The credit crunch and the hard times have pummeled the US market, where Japanese automakers make a bulk of their profit. Data from automakers show US sales fell to 13.2 million vehicles in 2008, down 18 per cent from 2007. In December alone, US sales plunged 36 per cent, and Nissan's slid 31 per cent on year. Although the Japanese have been expanding in China, Brazil, Russia and other new markets, they are still small compared to the US and Europe.

Adding to the woes, the Japanese market, which had been stagnant for years, is also contracting. Japan sales of new vehicles fell to 3.2 million vehicles last year, the lowest in 34 years. Nissan Chief Operating Officer Toshiyuki Shiga said he was counting on a revival in the US market.

"The recovery will get moving once financing problems settle down and American individual consumer sentiments start looking up," he told reporters recently.

Japan logs worst-ever fall in machinery orders

Channelnewsasia in Singapore reported today that Japan is experiencing a record rapid decline in machinery orders and things are not forecasted to be rosy in future either. This will surely impact the business however our view is that the bilateral trade is so small that there may not be a significant impact on the outsourcing to India. However we must all brace ourselves for a tough time ahead. Editor
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TOKYO: Japanese machinery orders plunged at the fastest pace on record in November as companies slashed investment to cope with the deepening recession, official figures showed Thursday.

The slump took economists by surprise and added to the gloom surrounding Asia's biggest economy, which has been hit hard by a slump in exports.

Core machinery orders, a leading indicator of corporate capital spending, fell 16.2 per cent in November from the previous month, the steepest fall since comparable records began in 1987, the government said.

The figures "showed clearly that corporate sentiment is worsening rapidly," said Resona Research Institute economist Hideyuki Araki.

"Companies are slamming the brakes on production and capital investment, sending (the economy) into a state of freefall," he said.

Market forecasts had been for a drop of 7.5 per cent, after a 4.4 per cent decline in October.

The grim figures reinforced fears that Japan's recession deepened in the fourth quarter of last year as the global economic crisis escalated.

"The economy is worsening so quickly that even economists cannot assess it properly," Daiwa Institute of research economist Hiroshi Watanabe said.

"As exports are falling, inventory stockpiles are increasing, prompting companies to curb production. They can't spend in this climate," he said, predicting further falls in orders.

Orders by manufacturers dived a record 33.2 per cent in November amid weak demand from export-oriented companies such as car and electronics makers. Orders by non-manufacturers rose 0.5 per cent. Foreign demand fell 14.4 per cent.

"Capital spending is plunging, mainly among export companies which are facing losses," said Naoki Murakami, chief economist at Monex Securities.

The report contributed to the gloomy mood on the Asian stock markets.

Tokyo's Nikkei index was down more than five per cent in afternoon trade.

Business investment had until recently been a key driver of a recovery in Japan's economy from recession in the 1990s, as Japanese companies expanded their global production facilities to meet brisk demand.

But with consumers tightening their belts worldwide amid a wave of layoffs, Japanese companies such as Toyota and Sony are now looking to reduce their spending on new plants and equipment to ride out the crisis.

Last month Toyota Motor predicted its first ever annual operating loss, and the Yomiuri newspaper reported Thursday that Nissan Motor also expects to post an operating loss in the current financial year to March.

The rapidly deteriorating economy is a major headache for Japan's Prime Minister Taro Aso, who is facing dwindling public support.

The ruling coalition forced an extra budget to fight the recession through the powerful lower house of parliament this week, despite objections from some lawmakers in both the ruling and opposition parties.

Tuesday, January 13, 2009

Bullet Trains in India - Has the time come?

Press Trust of India reported the mission of Sh. Lalu Prasad to Japan. I hope India will soon see bullet trains. This would mean someone can live in Chennai (or Amritsar) and work in Bangalore (or Delhi) by travelling just 1 hour by train instead of 5 hours now! I am sure this will mean a HUGE boost to our economy and a big strain can be avoided on our over crowded cities! Editor.
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New Delhi, Jan 13 (PTI) Railway Minister Lalu Prasad, who has an ambitious plan for introducing high-speed train corridor in the country, today took a ride on the bullet train in Tokyo.

Prasad, accompanied by senior railway officials, got first hand experience of the fast trains travelling from Tokyo to Kyoto at a speed of about 300 km per hour. He boarded Shinkansen -- the Japanese name for the bullet train -- from the Tokyo station at 9.10 am (local time).

The Tokyo-Kyoto bullet train ride normally takes about two hours and 20 minutes to cover the distance of about 515 km between the two stations.

Later in the evening, he and his team will travel to Shin-Kobe by another bullet train. The team is also scheduled to again travel to Tokyo from Shin-Osaka station by Shinkansen on Wednesday.

Prasad is leading the team from the ministry to Japan to have a detailed discussion for a loan for the Dedicated Freight Corridor (DFC).

Meanwhile, the Railways have invited global tenders for conducting pre-feasibility study of high-speed train corridor on the Delhi-Chandigarh-Amritsar route.

The study will focus on technicalities, financial and operational viability of the project, said a senior Railway Ministry official.

Besides the Delhi-Amritsar route, the Railways have decided to conduct pre-feasibility studies for four more high-speed passenger routes.

The routes are Pune-Mumbai-Ahmedabad, Hyderabad- Dornakal-Vijaywada-Chennai, Chennai-Bangalore-Coimbatore- Ernakulum and Howrah-Haldia. PTI

Friday, December 26, 2008

Trade pact with Japan

India & Japan are moving closer in their economic relationship. Trade between the two countries has grown by 250% in the last 4 years yet it lags well behind the trade with China. Indo-Chine trade has already crossed USD 20 Billion but Indo-Japan trade is merely at USD 10 Billion. This is despite the fact that Indo-Chine trade started to accelerate at the same time! The article on livemint.com provides more details below. Editor.

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New Delhi: Trade officials of India and Japan will try again in February to resolve some ticklish issues blocking the tariff-breaking bilateral pact.Commerce ministry officials will engage with their Japanese counterparts to bridge the gap on issues such as recognition of Indian pharmaceutical products by Japan and services.

India is keen on gaining market access through a free trade agreement for the $19 billion (Rs93,100 crore) pharmaceutical industry in Japan, which is one of the major importers in the world.Indian firms say their products are not recognized by Tokyo in terms of quality and safety standards despite the approval by the US authorities.
India also wants wider reach for its services sector, which the Japanese are a bit circumspect about.

While India’s trade with Japan has more than doubled in the last four years from about $4 in 2003-04 to almost $10 billion in the last fiscal, many products such as oilseeds, dairy products, sugar and sugar products face tariff peaks in Japan.