#Japan #Tokyo #business survey #Trump Tariffs #Japan Federation

Recent Survey on Economic Sentiment among Japanese Small Businesses

In June 2023, the Japan Federation of Corporate Associations, commonly referred to as Zenho-ren, conducted a survey targeting around 1,932 small and medium-sized enterprises (SMEs) out of approximately 70,000 member companies. The survey, aimed at gauging the economic sentiment among business owners, utilized its respected corporate survey system registered by 14,455 members to gather insights on various issues including current business conditions and populations of employees.

The results of the survey showed a concerning trend, particularly when compared to the previous survey conducted in December 2022. The percentage of business owners reporting improved performance declined notably, with wholesale and retail sectors falling by 7.7% and the accommodations and food services sectors reporting a decrease of 5.8%. Overall, there was a drop of 3.6% in the assessment of business performance.

Amidst widespread discussions surrounding US tariff policies, particularly the so-called 'Trump tariffs', the sentiments were surprisingly mixed. Approximately 38% of respondents indicated they believed these tariffs had a major or minor impact, nearly balancing out with those who felt the tariffs would have little effect. Interestingly, only 13% of respondents foresaw future impacts from these tariffs, suggesting a level of optimism that contradicts widespread media narratives.

However, certain sectors, particularly transportation and manufacturing, expressed higher levels of concern regarding the tariffs. This highlights that while the overall sentiment may appear stable, specific industries might need to prepare for potential disruptions in the near future.

When it comes to employment, the issue of labor shortage remains prevalent, as 54.9% of respondents claimed to have difficulties in recruitment, a figure consistent with the previous surveys that recorded 55.0% and 55.1%. Employers are increasingly focusing on strategies to retain employees, which includes improving working conditions, enhancing workplace environments, and offering personalized support through one-on-one meetings.

The current rise in the cost of living has also influenced hiring strategies across various companies. Many have responded by increasing starting salaries and overall compensation. Furthermore, larger firms have noted a rising trend of employees leaving for better pay, while others remarked that the upward pressure on labor costs has made it easier to pass these costs onto consumers as price increases.

According to Professor Yoshihiro Yasuda from Hitotsubashi University’s Graduate School of Management, the survey indicates varying concerns among different segments. He pointed out that industries like transportation, construction, and accommodations are preoccupied with addressing staff shortages, while manufacturing and retail need to focus on domestic market expansion and customer acquisition strategies.

In conclusion, the latest survey sheds light on the economic sentiment of Japan’s SMEs amidst the ongoing challenges posed by external factors including the US tariff policies. It underscores the need for tailored strategies that address sector-specific issues, reflecting the complexities that small businesses are currently navigating.