76% of corporate leaders say Japan’s economy is ‘expanding’

Business confidence has dramatically improved after COVID-19 was downgraded to the equivalent of seasonal flu.

An Asahi Shimbun survey of business sentiment among 100 major companies nationwide found that 76 viewed the domestic economy as “expanding” or “gradually expanding.”

The finding represents an increase of 30 companies from the previous survey last November.

Many corporate leaders are optimistic that economic activity and personal consumption are on the rise now that the novel coronavirus has lost its scare factor.

However, concerns remain about labor shortages and a slowdown in overseas economies that could impact Japan.

The Asahi Shimbun conducted the survey from July 3 to 14.

Seventy-five companies responded that the domestic economy is “gradually expanding.” One company said it is “expanding.”

Twenty-two companies viewed the economy as “at a standstill.” The figure was half that of the previous survey late last year.

When asked to choose up to two reasons for their assessment, most companies, 71, cited “personal consumption.”

Asked about the prospects for personal consumption over the next three months, 74 companies expected a “gradual recovery,” up from 44 in the previous survey.

“The mindset of consumers toward spending has improved,” said Taro Fujie, president of Ajinomoto Co. “We are at the beginning of a cycle where wage increases are linked to appropriate price hikes.”

Chiharu Fujioka, managing officer of Mitsui Fudosan Co., noted that hotel occupancy rates exceeded 80 percent, and that “the average daily rate is higher than in 2019 before the pandemic.”

In addition to the easing of pandemic-related restrictions on social activities, the influx of foreign visitors following the lifting of entry curbs is a positive factor.

Tatsuya Yoshimoto, president of J. Front Retailing Co., said that along with an increase in domestic travelers and foreign tourists, “customer numbers and sales at department stores and shopping centers have grown.”

“Business activity at large-scale stores near stations, which had been slow to recover, has also significantly improved,” he said.

Forty-three companies cited “capital investment” as a reason for their assessment.

Fifty-one companies answered that they will increase their domestic capital investment in the current fiscal year compared to the previous fiscal year.

Ichiro Ozeki, president of Secom Co., said his company has received many inquiries about access control systems.

“Investments in facilities aimed at improving work efficiency and saving labor are increasing amid growing labor shortages caused by the recovery from the pandemic,” he said.

On the other hand, senior officials of companies who view the domestic economy as “at a standstill” voiced concern about labor shortages and the slowdown of overseas economies.

“While demand for construction is strong, there are delays in projects due to a lack of manpower,” said Nobuaki Nara, president of Tokyo Steel Manufacturing Co.

Turning to the global economy, 51 companies took a cautious view, saying it is “at a standstill.”

Takahiro Mori, vice president of Nippon Steel Corp., said, “There are also downside risks, such as the tightening of monetary policy by central banks in the United States and Europe and the downturn in the Chinese economy.”