Next Monday sees the release of the latest Tankan survey of Japanese business sentiment from the Bank of Japan.
It will make depressing reading, not only for what Japanese companies are now thinking about the economy and their place in it, but about the outlook for 2009.
Gloomy might be too nice a description after the news yesterday that the economy contracted more quickly in the third quarter than originally estimated.
Later this week Toyota is due to provide an update on its 2008 and 2009 sales forecasts, and no doubt its current trading position.
Sony yesterday revealed it was cutting 16,000 jobs across the group. It was the biggest cut so far by a Japanese company in this slump, which yesterday deepened.
All in all there’s a growing feeling that the slide in the Japanese economy is worsening, much the way that the slump in the US and parts of Europe is deepening.
For Australia it’s going to be bad news: our biggest trading partner will cut the level (and price) of what it wants from us next year.
Added to the slump in shipments to China (not to mention South Korea and slowing India), the outlook for exporters is probably worse than it has been for sometime.
Not even the boost to export incomes from the 30% slump in the value of the Aussie dollar will be able to disguise the hits being taken on the profit and loss line (not to mention revenues) by exporters.
If anyone thought that Japan wouldn’t slide further, a second reading of third quarter economic growth from the government yesterday should be enough to put those optimistic thoughts to bed.
Revised third quarter GDP figures show that the economy contracted by 0.5% quarter on quarter, not the 0.1% originally announced last month.
On an annualised basis, the third quarter contraction – which put Japan officially into recession – is now estimated at 1.8%, rather than 0.4% as previously reported.
The downward revision was worse than many economists expected. Japanese economists had been forecasting an annualised figure of 0.9%.
Japan is now sliding slightly faster than eurozone economies, but not the US where the feeling is for a revised third growth figure of well over 1% in the quarter.
However, the revised data are likely to fuel pessimism about the prospects for the Japanese economy over the coming year.
Analysts now expect further bad news from the Bank of Japan’s Tankan survey of sentiment among manufacturers, when it is released on Monday.
According to surveys from Bloomberg and Dow Jones news agencies the survey could show the worst deterioration in sentiment in more than 30 years.
Despite having low debt levels, Japanese companies are facing rising cash flow problems as revenues and margins contract.
Companies are also facing difficulties raising funds through the capital markets, prompting the most rapid rise in bank lending since records became available in 1992.
A report out Monday in Tokyo revealed that the number of listed Japanese companies failing had hit a record so far in 2008.
As expected property and construction companies are bearing the brunt of the fallout from the global financial crisis.
Overall corporate bankruptcies rose 5.3% to 1,277 cases in November from a year earlier, according to the report from research firm Tokyo Shoko.
In November, builder Oriental Shiraishi Corp, property developer Morimoto Co Ltd and condominium developer Dix Kuroki Co Ltd went under bringing the year-to-date number for listed companies to 30. Of these, 23 were property and construction companies.
That tops the annual post-war record of 29 in 2002, when major banks offloaded large amounts of bad loans in the wake of the last recession in Japan.
