Japanese Consumer Confidence Holds Steady in June; Prudential Survey Finds Japanese Consumer Confidence at the end of the Second Quarter Remaining at Higher Levels than First Quarter 1999.
Despite recent announcements of layoffs among large Japanese companies, consumer confidence in Japan remained unchanged last month, according to the June 1999 Prudential Japanese Consumer Confidence Survey. The survey's economic expectation indicator stood at 42.6 in June 1999, up from a low of 26.9 in January 1999. The average for this indicator for the second quarter was 46.4, up from an average of 34.2 for Quarter 1 (see Chart 1).
"Confidence is at a crossroads in Japan, with consumers assessing a mixture of positive and negative news, and trying to decide whether things will get better or worse in the months to come," said Rodger Lawson, executive vice president of International Investments and Global Marketing Communications for Prudential.
On the positive side, the unexpected announcement in June of first quarter GDP growing at a 7.9 percent annualized rate was received positively by the market and the Nikkei-225 average gained 9.3 percent through June 28. Some economists have indicated this is merely a "blip" caused by the government's stimulus package. On the negative side, job layoffs were announced at several large Japanese companies, raising employment stability concerns, especially among middle-aged, middle-class workers.
"Japanese consumers are looking for more consistently positive signs that their economy is on the mend. Improving consumer confidence resulting in increased spending and investment in the stock market is an important ingredient in a sustained economic recovery," Lawson added.
Significant findings in the Prudential survey include:
Bullish Sentiment Continues
-- For the third straight month in 1999, Japanese consumers bullish
on the stock market slightly outweigh the bears, with 29 percent
expecting the stock market to rise (bullish) and 24 percent
expecting the market to decline over the next six months
(bearish) (See Chart 2).
-- Although the margin of bulls over bears of +5 percent in June has
declined since April's margin of +13 percent, the margin is still
significantly higher than the -9 percent level of January 1999.
-- Despite the rising stock market in June, mixed economic signals
and noteworthy layoffs kept consumer confidence from rising.
-- Investors are even more optimistic than in prior months about the
Japanese stock market (38 percent bullish, and only 20 percent
Men Continue to Believe in the Recovery
-- Japanese males continue to be more optimistic than females about
the economic conditions in the next six months. The economic
expectations indicator for males is 53.6 in June vs. 29.1 for
females (see Chart 4).
-- Males are nearly two and a half times as likely to be bullish
than bearish (41 percent vs. 17 percent).
-- An increasing proportion of males believe in having some of their
money invested in the stock market in order to accomplish their
most important financial goals (28 percent in the second quarter
of 1999 vs. 24 percent in the first quarter) (See Chart 6)
"It is interesting to see that male investors in Japan are interpreting the same mixed bag of economic events much more positively than women, and they are optimistic that the recent rising trend in the stock market will continue," said Mohan Rao, Director of Research at Prudential. "Male investors may be the first to benefit from an economic and stock market recovery in Japan," added Rao.
The Prudential Japanese Consumer Confidence Survey includes data on Japanese opinion of economic and business trends, personal financial situations, and retirement planning. Conducted for Prudential by Japan Statistics & Research Company Limited (JSR), Tokyo, the sample is extracted at random from the JSR Access Panel while taking into consideration age/gender/regional requirements in relation to National Census Data. The survey interviewed 1,300 households with annual income of 3 million yen or more each month (3-5 million yen: 18 percent of the sample; 5-10 million yen: 57 percent; more than 10 million yen: 25 percent) and was conducted in January, February, March, April, May and June of 1999, following an initial benchmark study in July of 1998. The survey will continue to be conducted each month on an ongoing basis. The maximum range of error for the survey at 95 percent confidence is +/- 2.7 percentage points. Additional data will be provided upon request.
Prudential, with more than $375 billion in assets managed or administered at year-end 1998, is the largest life insurance company in the United States, and one of the largest diversified financial institutions in the world. Prudential has a global presence in 30 countries, providing a variety of products and services in the areas of insurance, securities, investments and real estate to more than 30 million customers.
Prudential of Japan, a subsidiary of Prudential, has been one of the most innovative and fastest growing life insurance companies in the world. Prudential-Mitsui Trust Investments Co. Ltd., is among the first joint ventures in Japan between a foreign firm and a Japanese bank offering consumers access to investment trust products.
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|Date:||Jul 2, 1999|
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