Upmarket cup noodles and chocolates keep Abenomics' pulse beating
16/11/2015 21:00
* Japan slides into recession for second time in a year
* But there is strong demand for some higher-value goods
* Sales of upmarket cup noodles up 10 pct even after price
rises
* And part-time wage rises are another good sign for
Abenomics
By Kazunori Takada and Ritsuko Shimizu
TOKYO, Nov 17 (Reuters) - For the second time in a year,
Japan's economy has slipped into recession, but consumers' taste
for upmarket noodles and pricier chocolates suggests some
pockets of resilience, and some hope for 'Abenomics', the
reflationary policies championed by Prime Minister Shinzo Abe.
Concerned about faltering growth in China and the global
outlook, Japanese companies are reluctant to spend their ample
cash in capital investment and wages.
But consumers content to pay a bit more for added-value
products offer some counter argument to those proclaiming
Abenomics' demise.
Nissin Foods Holdings Co Ltd 2897.T added more meat and
toppings to its signature Cup Noodle products earlier this year,
and raised prices by 5-8 percent. Sales rose by a tenth in
April-September from a year earlier.
And sales of chocolate bars priced at 250-259 yen
($2.03-$2.10) jumped by more than a third in the year to March
compared with two years ago. Sales of chocolate priced at 50-99
yen rose just 1.2 percent, according to data from an industry
body.
"Consumers who pay more for value-added products will
underpin private consumption," said Hiroki Shimazu, senior
economist at SMBC Nikko Securities.
HIGHER PART-TIME WAGES
Strong gains in part-time wages, caused mainly by a shortage
of labour, are another brighter spot helping support the
economy.
Part-timers' hourly wages hit record highs for a fourth
straight month in September, data from private-sector agency
Recruit Jobs showed, with pay rising 1.5 percent in big cities.
Overall wage growth has remained subdued at around 0.6 percent.
Companies in the service sector, which rely more on part
time work, say that upward trend is likely to continue.
"We're not at a point where we don't have enough staff, but
the cost of hiring is going up every year," said Yasutaka
Kawamura, president of beef bowl restaurant operator Yoshinoya
Holding Co Ltd 9861.T .
A continued increase in wages, even if part-time, would be
good news for Abe, who has repeatedly urged businesses to raise
wages as part of his policy aimed at reflating Japan's economy.
Last week, Bank of Japan board member Yutaka Harada defended
the central bank's massive stimulus programme, saying the strong
part-time job market was helping underpin household income.
urn:newsml:reuters.com:*:nL3N13619J
Kozo Yamamoto, a ruling party lawmaker and one of the
architects of Abenomics, told Reuters on Monday that the latest
GDP data "was a bit shocking" and the government should offer
pay-outs to low-income households and pensioners, who don't
benefit much from wage hikes or rising corporate revenues
triggered by Abenomics.
"Capital expenditure lacks steam and private consumption
hasn't recovered fully from the post-sales tax hike slump," he
added, referring to the impact of a tax increase that bumped
Japan into recession a year ago, dampening optimism over
Abenomics. "The economy lacks a driver for growth," unless the
government deploys additional fiscal spending, he said.
MIXED PREDICTIONS
Economists and analysts in a Reuters survey predicted the
economy would rebound this quarter and stay on a moderate growth
trend through the next fiscal year. urn:newsml:reuters.com:*:nL3N13630Z
But in a separate survey last week, Japanese companies said
any rebound would only occur well into next year. urn:newsml:reuters.com:*:nL3N1342RS
The Bank of Japan's quarterly tankan survey showed on Oct. 1
that companies plan to increase their capital spending by 6.4
percent this financial year, with that figure rising to 10.9
percent when just large companies are polled.
Data on Monday showed July-September capital expenditure
fell by a more-than-expected 1.3 percent, dragging the economy
into a second straight quarter of contraction. urn:newsml:reuters.com:*:nL3N1371FH
"If the economic outlook is not bright, companies will be
hesitant to invest," Hiromasa Yonekura, honorary chairman of
Keidanren, a powerful business lobby, told reporters on Monday.
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Japan CPI http://link.reuters.com/tur95w
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(Reporting by Kazunori Takada and Ritsuko Shimizu, with
additional reporting by Tetsushi Kajimoto, Leika Kihara and
Stanley White; Editing by Ian Geoghegan)
((kazunori.takada@thomsonreuters.com; +86-21-6104-1799; Reuters
Messaging: kazunori.takada.thomsonreuters.com@reuters.net))
Keywords: JAPAN ECONOMY/HOPE