The Wall Street Journal reports a sharp drop in attitudes of Japanese retailers and other service providers. No surprise there, but it's a step back to the dark days of Japan's recent deep recession:
The main index in the Cabinet Office's monthly Economy Watchers Survey, which gauges sentiment largely among retailers and the service sector plunged to 27.7 in March, from 48.4 in February. The 27.7 figure is the lowest since February 2009, when the index stood at 19.4.People are buying food, but holding off on restaurants, hotels and hairdressers. While some of the decline is due to the Japanese tendency to self-restraint, or jishuku, there are still supply disruptions and power outages.
The added dimension of nuclear damage raises the stakes from earlier catastrophes, reports the Financial Times:
The longer it takes the plant's operator, Tokyo Electric Power (Tepco), to resolve the crisis, the longer the blackouts will continue, and concerns about radiation could intensify. These factors make the outlook for consumer demand very uncertain, and distinguish this disaster from the 1995 Kobe earthquake, say economists.The damage and resulting outages are affecting all sorts of things people take for granted. One of four factories owned by Japan Tobacco that makes cigarette filters is out of commission, forcing the company to stop all shipments for 10 days and reorganize. Foreign companies have stepped up their exports into Japan.
Supplies of bottled drinks are short as well, as two of the top makers of bottle caps are offline.
Car production is still at half of normal volume in Japan, due to shortages of many different types of parts. From the FT:
[Toyota] said it was still having difficulty obtaining 150 different components, although that number was down from 500 components in the first weeks after the quakes.Toyota says it will soon resume production at all plants, however. Honda is starting up one or two factories this week, while Nissan expects to have all its plants running again by next week.
The shortage in Japan is a boon for U.S. carmakers, however. Faced with the weakest sales in many years, they've been offering price incentives, but without new supply of Japanese cars the market, they are pulling the discounts. Prices of used cars are rising too, says the Financial Times:
General Motors sparked fears of a price war earlier in the year with a steep increase in incentives designed to win market share. But it reined back the discounts in March.
Reporting on a dinner last Thursday with GM's chief financial officer, Brian Johnson, an analyst at Barclays Capital told clients that Detroit's biggest carmaker "believes the inventory constraints cannot only reduce incentives in the near term, but also potentially set up another round of price increases".According to the used-car pricing service Kelley Blue Book, prices of a used Toyota Prius have risen almost 20 percnt this year. The average prices of small used cars, which are selling well due to rising fuel costs, are up 11 percent in a month.
Last, inventories of new Japanese cars are expected to be down 20 to 50 percent in May, says the head of AutoNation. Japan's disaster could thus be fleeting good news for U.S. automakers.