調査レポート 04/102 2005 年 2 月 8 日 JAPANESE ECONOMY Is the level sinking?... 1 US ECONOMY The economy continues to expand, but at a slower pace.. 3 December retail sales rose by 1.2% mom.... 3 CHINESE ECONOMY The economy remains vigorous.... 4 Expiration of the Multi-Fiber Agreement and Sino-US trade... 4 This is an abstract of our monthly reports on the Japanese, U.S., European, and Asian economies, translated and edited by Mariko Noda (ndmariko@ufji.co.jp), with the assistance of Chisa Hiro. The information and the views contained herein are subject to change without notice. Economic Research Department
JAPANESE ECONOMY: Is the level sinking? By Akihiko Suzuki, Senior Economist The economy is leveling off. Newspapers as well as economists are repeating this expression recently. Stairs level off at landing, either ascending or descending from there. Likewise, in stating that the economy is leveling off, nothing is obvious about the prospects of the economy: it is either recovering or slowing. This ambiguous expression may be easier to use than asserting a direction. What lies beyond the landing? Exports and production are important indicators to watch in order to predict the future. As both indicators have slowed since late last year, a slowdown is likely to continue. Exports to Asia and those of digital-related products such as semiconductors, which led growth, have lost momentum. Export volume expanded only by 2.8% on a year-on-year basis (yoy) in December. Meanwhile, production has slowed mainly in digital-related industries such as electronics parts, devices, and telecommunication machinery. December industrial production declined by 1.2% on a month-on-month basis (mom) and by 0.8% on a quarter-on-quarter basis (qoq) for two consecutive quarters. Nevertheless, the current slowdown in exports and production is not so serious. Exports of digital-related products have shrunk, but those of steel, transport equipment, and general machinery remain robust. Although the production peaked in May and slowed thereafter, the current production level has not fallen significantly from the peak, remaining almost unchanged. Given these numbers, some contend that the current slowdown is a temporary adjustment, and the economy is likely to resume expanding. Japan: Industrial production (Year of 2000=100, seasonally adjusted) 110 105 Production Shipment Inventory 100 95 90 85 00 01 02 03 04 Note: Cross marks indicate forecast figures based on the survey of Production Forecast in Manufacturing. Shaded areas indicate periods of recession by Cabinet Office. Source: Ministry of Economy, Trade and Industry 1
It is still unclear what lies ahead, but some worrying signs have emerged: it appears that the economy has begun to sink, as private consumption shrinks. December real living expenditures of workers households decreased by 3.8% mom, representing the fourth consecutive month of a decrease, and the extent of the decrease became larger. They fell by 2.5% qoq in the fourth quarter, the second consecutive quarter of a fall. Moreover, the December consumption level was lower than its peak level in April by more than 10%. Private consumption at the GDP base rose through the third quarter, but the growth rate was lower compared with healthy growth in the latter half of FY2003. The fourth quarter GDP statistics to be published on February 16 may find a further slowdown in consumption. Economists are discussing what will follow, with a lower, overall level due to a slowdown in consumption holding down the growth rate. It is, however, not likely that a slowdown in consumption will break the current recovery trend of the economy. As the economy has slowed, the employment and income environment has become bleak, making it difficult to maintain vigorous growth in consumption comparable with the latter half of FY2003. But private consumption always remains steady in spite of overall stagnation. Consumers usually try to maintain consumption levels even spending their savings. A slowdown in consumption may depress growth, but once exports and production begin to pick up with a recovery in the global economy, it is likely that the economy will accelerate again. (2005.2.2) Japan: Consumption and propensity to consume (yoy, %) (Seasonally adjusted, %) 8.0 6.0 4.0 Average propensity to consume (workers' household, R-H) Real living expenditure (Workers' household) 82 80 78 2.0 0.0-2.0-4.0-6.0 00 01 02 03 04 Source: Ministry of Internal Affairs and Communications 76 74 72 70 68 2
US ECONOMY The economy continues to expand, but at a slower pace. By Shin Takayama, Economist The growth rate of the economy has slowed, but its underlying vitality remains. Private consumption has grown steadily, and the rising trend is likely to stay in terms of business investment. The capacity utilization rate, a leading indicator of business investment, rose to 79.2% in December, close to the 80% level. Rates above 80% indicate an increase in new investment. The trade deficit is burgeoning: it reached $60.3 billion in November, representing the first monthly deficit over $60 billion. This is partly due to a slowdown in foreign economies and stubbornly high oil prices. (2005.1.24) December retail sales rose by 1.2% mom. Retail sales rose by 1.2% mom in December, representing the highest growth since September. Auto sales rose by 4.3% mom, due to an expansion in sales incentives and contributed to a robust increase in retail sales. The retail control components, that is, retail sales excluding auto and building materials, which are used to calculate the private consumption of GDP statistics, rose by 0.2% mom. The growth rate was slower than 0.4% mom in November, mainly because gasoline sales fell by 2.0% mom, due to lower gasoline prices. In fact, core retail sales, which are calculated by subtracting gasoline sales from the retail control components, increased by 0.5% mom, surpassing 0.3% mom in November, and indicating that consumption remains solid. (mom, %) US: Retail sales 2.5 2.0 Auto Ex. auto Retail sales 1.5 1.0 0.5 0.0-0.5-1.0-1.5 02 03 04 3
Holiday sales did not reach expected levels, but the results were fairly good. According to the chain store survey by the International Council of Shopping Centers (ICSC) and UBS securities, which covers more than 70 major stores, retail sales during November and December rose only by 2.3% yoy, which was lower than expected. Nevertheless, sales of non-store retailers, such as e-commerce and mail orders, expanded healthily. Non-store retail sales, which account for around 5% of total retail sales, increased by 13.8% yoy during November and December, significantly higher than the 8.6% increase in the same period of 2003. (2005.1.24) US: ICSC-UBS retail chain store sales (yoy, %) 10 8 6 4.0% yoy Nov.-Dec. '03 4 2 0-2 2.3% yoy Nov. -Dec. '04-4 02 03 04 05 Source: ICSC-USB CHINESE ECONOMY By Mariko Noda, Economist The economy remains vigorous. Despite the government s tightening measures, the economy still remains robust. Monthly economic data, such as fixed asset investment and industrial production, showed slowing signs, but the growth rate of money supply has begun to accelerate again, indicating that macro-control measures have not been fully successful. In fact, according to the National Bureau of Statistics, the real GDP growth rate for 2004 was 9.5%, surpassing 9.3% of 2003 and the second consecutive year of above 9% growth rate. (2005.1.28) Expiration of the Multi-Fiber Agreement and Sino-US trade The Multi-Fiber Agreement (MFA) and its import quota system expired in January 2005. The share of clothing in total imports of the OECD countries is only 4% and the impact of the MFA expiration is expected to be minor. Nevertheless, it should not be ignored since China is the unparalleled top exporter of clothing; China should be able to exploit the chance and 4
expand clothing exports in terms of production capacity. In addition, it is expected that China s trade surplus with the U.S. may grow further, partly due to an increase in clothing exports. China: Estimated impact of the MFA expiration <In case of U.S.> (%) <In case of EU> Share by country Before After Change in Change in import Share by country Before After import share share China 16 50 34 China 18 29 11 Rest of Americas 16 5-11 Turkey 9 6-3 Mexico 10 3-7 Other Central and Eastern Europe 9 6-3 Hong Kong 9 6-3 Other North Africa 6 5-1 EU* 5 0-5 Hong Kong 6 6 0 Taiwan* 4 0-4 India 6 9 3 Philippines 4 2-2 Poland 5 4-1 Indonesia 4 2-2 Morocco 5 4-1 India 4 15 11 Indonesia 3 3 0 Bangladesh 4 2-2 Bangladesh 3 4 1 Thailand* 0 3 3 Rest of the world 30 24-6 Sri Lanka* 0 2 2 Rest of the world 24 10-14 Note: Regarding countries with * sign, share 0% means no data. Source: WTO Discussion Paper No.5 In the U.S., an ever increasing trade deficit with China is considered an important factor behind its growing trade deficits, resulting in mounting pressures on China to revaluate its currency. But China s major exports to the U.S. are either products that U.S. companies make in China or those with few domestic competitors in the U.S. As a result, if the revaluation of the renminbi is not significant, its outcome will be limited. (2005.1.28) Chine: U.S. s trade balance with China (billion dollars) -140-120 -100-80 -60-40 -20 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 (%) 30 25 20 15 10 5 0 Balance of trade with China (L-H) Share of trade with China to total deficit (R-H) 5
China: Share of imports from China by category (%) 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 China's share in total import 4.8 5.4 5.8 6.1 6.5 7.2 7.8 8.0 8.2 9.0 10.8 12.1 0 Food and Live Animals 2.8 2.5 2.1 2.2 2.3 2.3 2.2 2.5 2.8 3.1 3.8 4.7 1 Beverages and Tobacco 0.5 0.7 0.2 0.2 0.2 0.2 0.3 0.2 0.4 0.4 0.4 0.3 2 Crude Materials; Inedible; Except Fuels 1.4 1.4 1.4 1.7 1.8 2.4 2.5 2.4 2.7 2.9 3.2 3.9 3 Mineral Fuels; Lubricants and Related Materials 0.8 0.4 0.6 0.7 0.7 0.7 0.7 0.3 0.5 0.3 0.4 0.3 4 Animal and Vegetable Oils; Fats and Waxes 0.1 0.3 0.3 0.2 0.5 0.5 0.6 0.4 0.5 0.5 0.5 0.6 5 Chemicals and Related Products 1.8 2.0 2.1 2.2 2.3 2.5 2.6 2.7 2.5 2.6 2.8 3.0 6 Manufactured Goods Classified Chiefly By Material 3.8 4.1 4.2 4.7 5.0 5.7 6.2 7.1 7.7 8.8 10.5 12.2 7 Machinery and Transport Equipment 1.9 2.3 2.9 3.4 3.9 4.4 5.1 5.5 6.3 7.0 9.1 11.6 8 Miscellaneous Manufactured Articles 17.5 20.0 21.2 21.5 22.7 23.9 23.8 24.2 24.6 25.8 28.8 30.7 9 Commodities & Transactions Not Classified Elsewhere 2.1 1.3 1.4 1.5 1.5 1.7 1.9 2.0 2.2 2.4 2.7 3.6 SITC Section7(2003) Share of imports from China 71 Power Generating Machinery 3% 72 Machinery Specialized 4% 73 Metalworking Machinery 2% 74 General Industrial Machinery 11% 75 Office Machines And ADP equipment 29% 76 Telecommunications Equipment 24% 77 Electrical Machinery; Apparatus & Appliances 14% 78 Motor Vehicles 1% 79 Transport Equipment 1% SITC Section8(2003) Share of imports from China 81 Prefab Buildings; Sanitary; Plumbing; etc. 53% 82 Furniture & Bedding 36% 83 Travel Goods; Handbags 69% 84 Articles Of Apparel and Clothing 17% 85 Footwear 68% 87 Professional Scientific Instruments 7% 88 Photo Appt; Equipment & Optical Goods 17% 89 Miscellaneous Manufactured Articles 41% 6