Slowdown in the Recovery of Personal Consumption and Weakness in Corporate Capital Investment

「In Japan, inbound demand is expanding, particularly in urban centers, while consumer sentiment remains sluggish amid a continuing trend of declining real wages.」

「Real wages have been on a consistent downward trend since 2022, and the trend has been particularly pronounced in regional areas.」

「During the six-month interim consolidated accounting period from 1 November 2024 to 30 April 2025, the outlook for the economy remained uncertain because of continuing global geopolitical instability, including the protracted situations in Europe and the Middle East, volatile exchange-rate movements, the slowdown in US consumption and policy developments such as the new US administration's trade policy, and the stagnant real-estate market in China.」

「The food service industry also continues to face a challenging environment, including consumers eating out less due to high prices, as well as higher procurement prices and labor costs.」

「During the first six months of the fiscal year from 1 November 2023 to 30 April 2024, the outlook for Japan's economy remained uncertain because of the prolonged Russian invasion of Ukraine, heightened tensions in the Middle East and the ongoing depreciation of the yen.」

「During the first three months of the fiscal year from 1 November 2023 to 31 January 2024, Japan's economy showed signs of recovery in personal consumption and inbound demand in line with the solid recovery of the global economy. However, the outlook for the economy remained uncertain because of the prolonged Russian invasion of Ukraine, heightened tensions in the Middle East and other factors.」

「As COVID-19 was reclassified under the Infectious Diseases Act as a Category V disease, personal consumption and inbound demand showed signs of recovery. Meanwhile, the United States and Europe adopted rapid interest-rate hikes to combat accelerating inflation, and the widening interest-rate differential between Japan and the United States drove the yen lower. Prices also rose in Japan, particularly for imported goods.」

「During the first nine months of the fiscal year from 1 November 2022 to 31 July 2023, Japan's economy showed signs of recovery in personal consumption and inbound demand as COVID-19 was reclassified under the Infectious Diseases Act as a Category V disease. However, the outlook for the economy remained uncertain because of the prolonged Russian invasion of Ukraine, higher energy prices, price increases caused by the weaker yen and wage growth resulting from labor shortages.」

「In the food-service industry, the eighth wave of COVID-19, which began spreading in November 2022, reduced traffic, particularly at suburban stores, through late January 2023.」

「Going forward, the food-service industry is expected to face a continued difficult operating environment as progressing inflation caused by higher energy and raw-material prices strengthens consumers' preference for saving.」

「During the first nine months of the fiscal year from 1 November 2021 to 31 July 2022, Japan's economy entered a gradual recovery phase as economic activity normalized following the COVID-19 pandemic.」

「During the first six months of the fiscal year from 1 November 2021 to 30 April 2022, requests for restaurants and other establishments to voluntarily shorten their operating hours to prevent the spread of COVID-19 were eased, and personal consumption showed signs of recovery toward the end of 2021. However, in January 2022, the rapid spread of the Omicron variant led to the application of priority preventive measures, and consumer sentiment toward spending remained weak as consumers refrained from going out.」

「During the first three months of the fiscal year from 1 November 2021 to 31 January 2022, Japan's economy remained uncertain as economic activity continued to stagnate amid the spread of COVID-19, while energy prices surged.」

「During the first nine months of the fiscal year from 1 November 2020 to 31 July 2021, economic activity stagnated as COVID-19 spread, and the outlook for personal consumption remained uncertain.」

「During the first six months of the fiscal year from 1 November 2020 to 30 April 2021, economic activity stagnated as COVID-19 spread globally, prolonging the economic downturn. In the food-service industry, states of emergency were reimposed in January 2021 and April 2021, creating an ongoing difficult environment amid requests for restaurants to shorten their operating hours and a decline in customer traffic as consumers refrained from going out.」

「During the first three months of the fiscal year from 1 November 2020 to 31 January 2021, Japan's economy was significantly affected by the resurgence of COVID-19. A state of emergency was reimposed in January 2021, and the economy remained in an uncertain situation amid concerns about the impact on economic activity.」

「During the consolidated fiscal year from 1 November 2019 to 31 October 2020, Japan's economy deteriorated rapidly and entered a difficult phase as restrictions on economic activity were imposed in response to the spread of COVID-19. Although personal consumption showed some signs of recovery, the situation remained unpredictable, with the number of COVID-19 cases showing signs of rising again.」

「During the first nine months of the fiscal year from 1 November 2019 to 31 July 2020, Japan's economy was in an extremely difficult situation as economic activity and personal consumption stagnated amid the global spread of COVID-19, causing the economy to deteriorate rapidly.」

「During the first three months of the fiscal year from 1 November 2019 to 31 January 2020, Japan's economy entered a gradual recovery phase as employment and income conditions improved, although personal consumption showed some stagnation, partly because of the consumption tax hike. In addition, uncertainty surrounding the overseas economy increased because of disruption caused by the UK's withdrawal from the EU and signs of a global outbreak of a new form of pneumonia, leaving the outlook unclear.」

「During the consolidated fiscal year from 1 November 2018 to 31 October 2019, Japan's economy entered a gradual recovery phase as employment and income conditions improved.」

「During the first nine months of the fiscal year from 1 November 2018 to 31 July 2019, Japan's economy continued on a gradual recovery path, supported by firm employment and income conditions, among other factors.」

「During the first six months of the fiscal year from 1 November 2018 to 30 April 2019, Japan's economy entered a gradual recovery phase as employment and income conditions continued to improve.」

「During the first nine months of the fiscal year from 1 November 2018 to 31 January 2019, Japan's economy showed signs of weakening corporate performance as risks, particularly overseas risks, increased, and the prolonged trend toward economic recovery stalled.」

「Although wages rose as employment and income conditions improved, consumers' preference for saving persisted because of higher prices for fresh products, and personal consumption remained lackluster.」

「Nominal wages rose as employment conditions improved, but the increase was absorbed by higher energy and vegetable prices. Real disposable income was flat, and personal consumption remained lackluster.」

「However, wage growth, which would bring the benefits of the economic recovery to households, was limited, and personal consumption grew only gradually.」

「During the consolidated fiscal year from 1 November 2016 to 31 October 2017, Japan's economy entered a gradual recovery phase as strong global economic conditions drove growth in corporate earnings. However, improvements in employment and income conditions did not lead to higher wages or prices, and the prolonged period of weak consumption and a limited sense of recovery continued as a "low-temperature economy."」

「Personal consumption remained firm despite some fluctuations, reflecting improvements in employment conditions, including a rising active job openings-to-applicants ratio and a declining unemployment rate. Corporate capital investment was also firm on the back of strong overseas economies, and the economy entered a gradual recovery phase, although there was little sense that the recovery had reached households.」

「However, as consumers' real disposable income declined, their preference for saving strengthened, and personal consumption remained sluggish.」

「However, partly because the proportion of part-time workers among employees has been rising, real disposable income per household declined year on year, and personal consumption remained lackluster.」

「Although there were positive factors such as an improving employment environment and lower crude oil prices, consumer spending remained weak and the economy continued to be in a pause phase.」