Uncertainty in the capital investment environment due to a stronger yen, sluggish domestic sales and the slowdown in the Chinese economy

「Among the automotive-related companies that are major users of our group, production activity remained generally firm. However, as the pace of electrification changed, companies took a more cautious approach to assessing trade policies and overseas demand, leading to reviews of development and capital investment plans and closer scrutiny of their timing. As a result, demand in our group’s automotive-related fields remained weak.」

「Although investment in the automotive-related companies that are the Group’s main customers continued against a backdrop of medium- to long-term structural changes, including electrification, growing concerns over the export environment due to developments in U.S. tariff policy led the industry as a whole to take a more cautious approach to investment.」

「Meanwhile, the global economy remained in an uncertain phase due to concerns about the outlook for international trade stemming from the Trump administration’s tariff policies and the slowdown of the Chinese economy. In addition, geopolitical risks intensified further amid heightened tensions in the Middle East surrounding Iran, raising concerns about higher crude oil prices and stable energy supplies, and leaving continued uncertainty.」

「In the global economy, some progress was made in organizing the tariff policies of the Trump administration through negotiations with major countries. However, uncertainty remains over how the system will be administered and its future direction, and concerns over the outlook for supply chains and international trade persist. The global economy also remains uncertain because of the impact of persistently high commodity prices associated with prolonged geopolitical risks.」

「Among the Group's major users, automotive-related companies saw vehicle production and sales decline because of production suspensions related to certification misconduct and lower sales in China. In contrast, investment in next-generation mobility development remained at a high level and continued to be solid. Among electrical, electronic and semiconductor-related companies, investment in AI, electric vehicles, autonomous driving technologies and data center construction continued to expand, but demand for smartphones and personal computers remained weak, resulting in a slow recovery and generally weak performance. Among machine tool- and industrial machinery-related companies, investment in environmental impact reduction and new technologies such as electric vehicles remained solid, particularly investment in digitalization, automation, labor saving, and low-carbon and decarbonization initiatives. In contrast, recovery from persistent inflation in Europe and the United States and the slowdown in the Chinese economy was delayed, affecting production trends, which generally continued to slow.」

「Among the Group's major users, automotive-related companies saw vehicle production recover as supply constraints for components eased. Capital investment and research and development investment to support new technologies driven by next-generation mobility development, including electrification, also remained solid. Among electrical, electronic and semiconductor-related companies, investment to capture demand related to the rapid expansion of the electric vehicle market remained solid, but overall investment remained weak because of softer demand in the smartphone and personal computer markets. Among machine tool- and industrial machinery-related companies, investment in automation, labor saving, decarbonization, electric vehicles, autonomous driving and other new technologies increased, but production trends slowed because of external factors including the slowdown in the Chinese economy.」

「During the cumulative second quarter of the fiscal year, Japan's economy recovered gradually as the impact of COVID-19 on the economy began to subside and moves toward normalizing social and economic activity strengthened, particularly in inbound demand and personal consumption. The global economy remained uncertain because of persistently high inflation caused by soaring energy prices, the effects of monetary tightening in various countries, and concerns over the outlook for the Chinese economy. Among the Group's major users, automotive-related companies saw vehicle production recover as semiconductor supply shortages eased, while capital investment and research and development investment driven by next-generation mobility development remained solid. Among electrical, electronic and semiconductor-related companies, investment to capture demand related to the rapid expansion of the electric vehicle market remained solid, but overall performance was weak because of the impact of softer demand in the smartphone and personal computer markets. Among machine tool- and industrial machinery-related companies, demand was expected for automation, labor saving, decarbonization and advanced technologies, but production trends generally slowed because of external factors including higher interest rates in the United States and Europe and the slowdown in the Chinese economy.」

「During the cumulative first quarter of the fiscal year, Japan's economy recovered gradually as moves toward normalizing social and economic activity strengthened, particularly in inbound demand and domestic travel-related personal consumption, following the classification of COVID-19 as a Category V infectious disease. In the global economy, inflation remained high because of prolonged conflict in Ukraine and soaring energy prices, while economic slowdowns caused by monetary tightening in various countries continued, leaving the outlook uncertain.」

「Regarding the economic outlook, we will need to monitor developments related to living with COVID-19, the prolonged conflict in Ukraine, accelerating inflation caused by soaring energy prices, and the impact of monetary tightening in various countries. However, we expect economic activity to gradually return to normal. Among the Group's major users, the impact of semiconductor shortages is expected to gradually ease, and investment in next-generation mobility development is expected to remain firm.」

「Among the Group's major users, automotive-related companies were unable to increase production substantially because of semiconductor shortages, but production volumes were recovering and investment in next-generation vehicle development to strengthen international competitiveness remained solid. Among electrical, electronic and semiconductor-related companies, demand for smartphones and personal computers declined, while investment in automotive devices related to electric vehicles and autonomous driving remained solid. Among machine tool- and industrial machinery-related companies, equipment demand related to labor saving and decarbonization remained firm, and production trends remained strong.」

「Among the Group's major users, automotive-related companies lacked momentum in recovering production because of the continuing impact of semiconductor shortages and China's lockdowns, although production improved year on year. Investment in next-generation vehicle development remained solid. Among electrical, electronic and semiconductor-related companies, shipments slowed in response to weaker consumer demand for smartphones, but investment related to automotive applications remained solid. Among machine tool- and industrial machinery-related companies, demand for equipment driven by labor saving and the transition to electric vehicles remained firm, and production trends remained strong.」

「During the cumulative first quarter of the fiscal year, Japan's economy showed signs of normalization in social and economic activity as restrictions were eased while the impact of COVID-19 continued. However, downside risks to the economy rose rapidly because of price increases caused by higher resource prices and the weaker yen, as well as supply chain disruptions. The global economy also remained uncertain because of prolonged geopolitical risks related to the situation in Ukraine and the impact of China's zero-COVID policy.」

「Regarding the economic outlook, we will need to monitor the impact of COVID-19 and Russia's invasion of Ukraine, but we expect economic activity to gradually return to normal. Among automotive-related companies, the impact of semiconductor shortages is expected to gradually ease, investment centered on electrification is expected to remain firm, and capital investment and production trends among electrical, electronic and semiconductor, machine tool and industrial machinery-related companies are also expected to remain strong.」

「During the cumulative third quarter of the fiscal year, signs of recovery had emerged as the severe conditions caused by COVID-19 gradually eased and new infections began to decline with rising vaccination rates. However, uncertainty over the outlook persisted because of the emergence of new variants. The global economy recovered rapidly as economic activity resumed, particularly in Europe and the United States. Nevertheless, the outlook remained unpredictable because of supply constraints, soaring resource prices, and concerns over a renewed spread of COVID-19 caused by the Omicron variant.」

「Among the Group's major users, automotive-related companies initially maintained strong domestic and overseas sales, but shortages of semiconductors and components from Southeast Asia affected production and sales, leaving concerns. Among electrical, electronic and semiconductor-related companies, strong global demand continued to exceed supply, and investment continued to expand. Among machine tool- and industrial machinery-related companies, demand in Europe, the United States and Japan continued to recover steadily, while some weakness was seen in China as demand for personal computers and tablets slowed. In addition, global shortages of materials, including semiconductors, made some products handled by the Group difficult to procure, affecting sales activities for users.」

「During the cumulative first quarter of the fiscal year, Japan's economy remained difficult amid a resurgence of COVID-19 infections, although signs of recovery continued, mainly among manufacturers and export-related companies. The global economy also showed signs of recovery, particularly in Europe and the United States, where vaccination programs were advanced, although some countries and regions faced concerns over renewed infections. Among the Group's major users, automotive-related companies maintained strong domestic and overseas vehicle sales. Investment to address CASE—connected, autonomous, shared and electric mobility—remained solid, and initiatives toward carbon neutrality also began. Among electrical, electronic and semiconductor-related companies, demand for automotive and smartphone applications remained strong and capital investment continued to recover. Among machine tool- and industrial machinery-related companies, demand began to recover in North America and Europe in addition to China, and production trends showed signs of recovery. However, concerns over the outlook remained, including difficulties procuring some products handled by the Group because of shortages of semiconductors and resins.」

「Among the Group's major users, automotive-related companies saw production recover as demand recovered mainly in China, but maintained a cautious stance toward capital investment because of the significant impact of COVID-19. Among electrical, electronic and semiconductor-related companies, demand related to 5G remained strong and demand for automotive electronic components also began to recover, but the effects of weak capital investment in the first half of the fiscal year remained in some areas.」

「During the cumulative third quarter of the fiscal year, Japan's economy remained in a severe condition overall because of the impact of COVID-19, despite signs of recovery in some areas. The global economy also showed signs of recovery overall, although conditions varied by country and region, but uncertainty over the outlook persisted. Among the Group's major users, automotive-related companies saw production recover as demand recovered in North America and China, but maintained a cautious stance toward capital investment. Among electrical, electronic and semiconductor-related companies, demand related to 5G remained strong, but capital investment was weak in some areas because of the economic downturn. Among machine tool- and industrial machinery-related companies, demand recovered in North America and China, but production trends lacked momentum because domestic capital investment remained weak.」

「Among the Group's major users, automotive-related companies temporarily suspended factory operations because of the spread of COVID-19, but production gradually recovered. However, capital investment remained cautious because vehicle sales were expected to take some time to recover. Among electrical, electronic and semiconductor-related companies, demand related to 5G remained solid, but overall demand recovery lacked momentum because of the economic downturn, and capital investment showed signs of slowing. Among machine tool- and industrial machinery-related companies, demand in China showed signs of recovery, but capital investment remained weak both domestically and overseas, leaving production trends weak.」

「During the cumulative first quarter of the fiscal year, Japan's economy deteriorated rapidly and remained in a severe condition as economic activity was significantly restricted by the spread of COVID-19, resulting in declines in personal consumption and exports. The global economy also remained sluggish because of the impact of the prolonged U.S.-China trade friction and the spread of COVID-19, leaving the outlook extremely uncertain. Among the Group's major users, automotive-related companies adopted a cautious stance toward capital investment as domestic and overseas sales remained weak and production activity contracted. Among electrical, electronic and semiconductor-related companies, capital investment showed signs of slowing as sales for automotive applications remained weak, despite solid demand related to 5G. Among machine tool- and industrial machinery-related companies, production trends remained weak as investment in Japan, Europe and the United States cooled, although demand in China showed signs of recovery.」

「The outlook remains uncertain for automotive-related companies, with some production lines temporarily shut down. Although demand related to 5G, the next-generation communications standard, is expected to increase among electrical, electronic and semiconductor, machine tool and industrial machinery-related companies, production trends are expected to remain uncertain, as demand from the automotive industry is forecast to remain weak because of the impact of the COVID-19 pandemic.」

「During the cumulative third quarter of the fiscal year, Japan's economy remained uncertain because of U.S.-China trade friction, the UK's withdrawal from the EU, and the slowdown in the Chinese economy, despite continued improvements in the employment and income environment. Among the Group's major users, automotive-related companies showed signs of sluggish domestic and overseas sales, partly because of concerns over the economic outlook, and some adopted a cautious stance toward capital investment. At the same time, investment aimed at future growth continued. Among electrical, electronic and semiconductor-related companies, capital investment showed signs of slowing because of weak demand for automotive applications, despite expectations of increased demand related to 5G, the next-generation communications standard. Among machine tool- and industrial machinery-related companies, production trends remained weak as U.S.-China trade friction continued and orders for machinery used in electrical and automotive applications remained sluggish.」

「During the cumulative second quarter of the fiscal year, Japan's economy generally continued to recover gradually, but concerns over a slowdown in the global economy were not dispelled because of the impact of U.S.-China trade friction and the UK's withdrawal from the EU, and uncertainty over the outlook increased. Among the Group's major users, automotive-related companies showed a cautious stance toward capital investment in some areas because of concerns over the economic outlook and signs of a slowdown in overseas markets. At the same time, investment aimed at future growth continued. Among electrical, electronic and semiconductor-related companies, capital investment showed signs of slowing as demand for smartphones remained weak. Among machine tool- and industrial machinery-related companies, production trends remained weak as U.S.-China trade friction continued and orders for machinery used in electrical and automotive applications continued to decline.」

「Among the Group's major users, automotive-related companies maintained firm domestic vehicle production and sales, but showed a cautious stance toward capital investment as overseas markets showed signs of slowing. Among electrical, electronic and semiconductor-related companies, demand for smartphones remained weak and some showed signs of slowing capital investment. Production trends also remained weak among machine tool- and industrial machinery-related companies.」

「The global economy continued to recover gradually overall, led by the United States, but uncertainty over the outlook persisted because of U.S.-China trade issues, the slowdown in the Chinese economy, and the UK's withdrawal from the EU.」

「During the cumulative third quarter of the fiscal year, Japan's economy continued to recover gradually, supported by improvements in the employment and income environment and corporate earnings. The global economy continued to recover gradually, but concerns over an economic slowdown were increasing because of the impact of U.S.-China trade friction and the UK's withdrawal from the EU. Among the Group's major users, automotive-related companies maintained solid domestic and overseas vehicle sales, while capital investment and research and development investment continued at high levels. Among electrical, electronic and semiconductor-related companies, sales for smartphones were sluggish, but demand for automotive and industrial equipment remained solid, so capital investment continued to improve. Among machine tool-related companies, overseas demand showed signs of slowing because of trade friction, but domestic demand remained firm, and orders from users overall remained strong.」

「During the cumulative second quarter of the fiscal year, Japan's economy continued to recover gradually, supported by improvements in the employment and income environment and corporate earnings. The global economy also continued to recover gradually, mainly in North America and the EU, but uncertainty over the outlook remained because of the impact of trade issues on the global economy and the UK's withdrawal from the EU. Among the Group's major users, automotive-related companies maintained solid production and sales, while capital investment and research and development investment for rationalization and labor saving were implemented at high levels. Among electrical, electronic and semiconductor-related companies, continued capital investment was undertaken as sales of smartphones and automotive products remained strong. Among machine tool-related companies, overseas demand showed signs of slowing because of trade friction, but domestic demand remained firm, and orders from users overall remained strong.」

「During the cumulative first quarter of the fiscal year, Japan's economy continued to recover gradually, supported by ongoing improvements in the employment and income environment and corporate earnings. The global economy also continued to recover gradually, mainly in North America and the EU, but remained uncertain because of concerns over trade issues originating in the United States and the UK's withdrawal from the EU. Among the Group's major users, automotive-related companies saw sluggish domestic vehicle sales, but maintained production at approximately the previous year's level. Capital investment and research and development investment to strengthen competitiveness remained solid. Among electrical, electronic and semiconductor-related companies, capital investment continued to improve as sales of smartphones and automotive products remained strong. Among machine tool-related companies, orders from users overall remained strong, with demand for automotive and semiconductor applications remaining high.」

「Although uncertainty over the outlook remains because of factors including U.S. policy developments and the UK's withdrawal from the EU, we expect the global and Japanese economies overall to continue recovering gradually. Capital investment by manufacturers in areas such as automation and labor-saving technologies, as well as research and development investment aimed at future growth, is expected to remain firm.」

「During the cumulative third quarter of the fiscal year, Japan's economy continued on a gradual recovery trend, supported by continued improvements in the employment and income environment and corporate earnings. Although concerns remained over U.S. policy management, the UK's withdrawal from the EU and geopolitical risks surrounding North Korea, the global economy continued to recover gradually, mainly in North America and the EU. In China, the economy continued to show signs of recovery, partly because of the effects of government policies.」

「During the cumulative second quarter of the fiscal year, Japan's economy continued on a gradual recovery trend, supported by continued improvements in corporate performance and the employment and income environment. The global economy also continued to recover gradually, mainly in advanced economies such as North America and the EU. However, uncertainty over the outlook remained because of U.S. policy management, the UK's withdrawal from the EU, and rising geopolitical risks surrounding North Korea.」

「The global economy continued to recover gradually, mainly in North America and the EU, but uncertainty over the outlook remained because of risks including U.S. policy management and the UK's withdrawal from the EU. Among the Group's major users, automotive-related companies saw signs of a slowdown in North American vehicle sales, but domestic sales remained firm. As corporate performance was generally strong, research and development investment and capital investment remained solid. Among electrical, electronic and semiconductor-related companies, sales of smartphones and automotive components remained solid. Among machine tool-related companies, demand for automation increased, particularly in China, while domestic demand also remained firm, mainly from automotive and semiconductor-related companies, resulting in a continued gradual recovery in orders.」

「During the cumulative third quarter of the fiscal year, Japan's economy continued on a gradual recovery trend, with improvements in the employment and income environment and signs of a recovery in personal consumption. The global economy also continued to show a gradual recovery. While advanced economies remained firm and the slowdown in emerging-market economies eased, volatility risks arising from political and economic developments in the United States, the United Kingdom and elsewhere meant that uncertainty over the outlook persisted. Among the Group's major users, automotive-related companies generally continued to record high sales levels, but some adopted a cautious stance toward capital investment because of the impact of exchange-rate fluctuations on corporate earnings and international political and economic conditions. Among electrical, electronic and semiconductor-related companies, demand for mobile devices and automotive products remained solid. Among machine tool-related companies, although demand remained weak both domestically and overseas, signs of improvement emerged in the order environment, including solid orders from the automotive sector.」

「During the cumulative second quarter of the fiscal year, Japan's economy continued on a gradual recovery trend, supported by continued improvements in employment and income. However, the economy remained clouded by uncertainty over its outlook, owing to weak corporate earnings caused by the stronger yen and slowing emerging-market economies, particularly China. Among the Group's major users, automotive-related companies planned solid capital investment again this fiscal year to strengthen competitiveness. At the same time, there were concerns that investment could be restrained because of the impact of the stronger yen on corporate earnings. Among electrical, electronic and semiconductor-related companies, demand for mobile devices and automotive products remained solid. Among machine tool-related companies, orders remained weak, as North American demand, which had been strong mainly for automotive applications, showed signs of leveling off.」

「Among the automotive-related companies that are the Group's main users, sales overseas, particularly in North America, have remained strong and robust capital investment is planned for the current fiscal year. At the same time, concerns have emerged about the impact on future capital investment of the effect of the stronger yen on corporate performance and sluggish domestic sales. Among electrical, electronic and semiconductor-related companies, demand related to smartphones has gradually recovered. Among machine-tool-related companies, however, orders for machine tools remained sluggish, reflecting the slowdown in the Chinese economy and a pause in North American demand.」