Risk of Economic Fluctuations and Reduced Customer IT and Capital Investment

「また、人手不足への対応や生産性向上を目的とした設備投資やデジタル化投資が継続する一方で、物価上昇や米国の金融・経済政策動向、中東情勢を含む地政学的リスク等の影響により、先行き不透明な状況が続いております。」

「The impact of heightened geopolitical risks, uncertainty in the global economy, rising prices and other factors is currently limited due to the business portfolio and diverse customer base of the group.」

「Meanwhile, exports have remained flat amid growing geopolitical risks, including a slowdown in the Chinese economy and a possible Taiwan contingency, and concerns about the impact on semiconductor supplies and component procurement.」

「Meanwhile, stagnation in consumer activity due to inflationary pressure and other factors resulting from persistently high resource prices and labour shortages, as well as an economic downturn caused by trade friction resulting from the US reciprocal tariff policy, are raising concerns, and economic conditions are expected to remain uncertain.」

「Meanwhile, stagnation in consumer activity is a concern due to inflationary pressure and other factors resulting from persistently high resource prices and labour shortages, and economic conditions are expected to remain uncertain.」

「The impact of COVID-19, regional conflicts including the invasion of Ukraine, the sluggish overseas economy, yen depreciation and higher prices was limited because of the company's business mix, which is relatively less affected by economic conditions, and its diverse customer base.」

「During the cumulative third quarter, Japan's economy remained on a gradual recovery trend as progress was made toward normalising economic and social activity. Meanwhile, close attention remains necessary amid concerns about a slowdown in the global economy against the backdrop of higher raw-material and energy prices resulting from the prolonged Russian invasion of Ukraine, global monetary tightening and other factors.」

「Continued close attention is required to overseas economic trends and their impact on the Japanese economy, including higher raw-material and energy prices resulting from the prolonged Russian invasion of Ukraine, the effects of global monetary tightening and concerns about the outlook for the Chinese economy.」

「Higher raw-material and energy prices resulting from the prolonged Russian invasion of Ukraine have affected import and consumer prices. As economies worldwide shift toward monetary tightening to curb inflation, continued close attention is required to overseas economic trends and their impact on the Japanese economy.」

「As the response to COVID-19 shifted to Category 5 and signs of containment emerged, economic and social activity moved toward normalisation and the economy gradually recovered. Meanwhile, continued close attention is required to overseas economic trends and their impact on the Japanese economy in light of higher raw-material and energy prices resulting from the prolonged Russian invasion of Ukraine and global monetary tightening.」

「During the cumulative third quarter, Japan's economy showed signs of recovery as restrictions on activities related to COVID-19 were eased and economic and social activity moved toward normalisation. Meanwhile, higher raw-material and energy prices resulting from the prolonged Russian invasion of Ukraine affected import and consumer prices. As economies worldwide shift toward monetary tightening to curb inflation, continued close attention is required to overseas economic trends and their impact on the Japanese economy.」

「Meanwhile, against the backdrop of higher raw-material and energy prices resulting from the situation in Ukraine and other factors, and disruption in financial and foreign-exchange markets accompanying global monetary tightening, the outlook for the economy is expected to remain uncertain. The manufacturing business conditions diffusion index in the Tankan, the Short-Term Economic Survey of Enterprises in Japan, has deteriorated for 4 consecutive quarters.」

「Meanwhile, as the domestic economy, particularly the manufacturing and logistics industries, continues to recover, concerns are growing about the impact on economic activity of higher raw-material and energy prices resulting from the situation in Ukraine and other factors, as well as disruption in financial and foreign-exchange markets accompanying global monetary tightening.」

「Meanwhile, as the domestic economy, particularly the manufacturing and logistics industries, continues to recover, the semiconductor shortage, for which no resolution is yet in sight, and the geopolitical situation in Ukraine are raising concerns about economic activity through higher energy costs affecting industry, shortages and price increases for rare metals essential to industry, disruption to global supply chains and other factors. Together with the yen's recent weakening trend, these developments require close attention to future changes in conditions.」

「The trend has shifted from investment restraint and postponement, seen among some domestic manufacturers concerned about the effects of the spread of COVID-19, toward product development and capital investment aimed at transforming business structures and strengthening competitiveness while coexisting with COVID-19. In particular, system investment related to the digitalisation of operations, or digital transformation, has been tending to increase substantially.」

「Although some domestic manufacturers continue to take a cautious approach, including restraining or postponing investment due to concerns about the prolonged spread of COVID-19, there has been no change in their basic stance of actively pursuing product development and capital investment to transform their business structures toward services and strengthen their competitiveness. Among companies that have experienced the COVID-19 pandemic, system investment related to the digitalisation of operations, or digital transformation, aimed at reviewing business operating methods and strengthening corporate competitiveness over the long term, has been increasing. Demand for software development in our related business areas remained strong during the cumulative first quarter.」

「Regarding corporate investment trends, some companies continue to take a cautious approach, including restraining or postponing investment due to concerns that the spread of COVID-19 may continue for an extended period. However, the value of machine tool orders, an indicator of capital investment, turned upward toward the end of last year, and the manufacturing and distribution industries are on the upward-sloping line of what is known as a K-shaped recovery.」

「Although some caution remains, including restraints and postponements of investment due to the prolonged spread of COVID-19, in relation to the previously firm capital and development investment by domestic companies in production facilities and service infrastructure, including export-related businesses, the value of machine tool orders, an indicator of capital investment, began to increase at the end of last year and recent reports show a recovery to ¥100 billion per month, indicating signs of recovery.」

「Aggressive investment in production facilities and service infrastructure by domestic companies, including export-related businesses, had remained firm through the previous fiscal year, but the outlook remains uncertain as the investment has been affected to some extent by successive waves of COVID-19 infections, from the first through the third wave.」

「During the first quarter under review, Japan’s economy deteriorated substantially overall, as the performance of domestic manufacturers worsened significantly due to a sharp decline in external and domestic demand caused by the spread of COVID-19 in Japan and overseas.」

「A substantial deterioration in economic conditions in Japan and overseas due to major political and economic fluctuations, large-scale regional disasters such as earthquakes, pandemics and other factors may cause customers to scale back or withdraw from their businesses and revise or reduce plans for capital investment, product development and information systems, leading to a decline in the company’s orders and sales and affecting its operating results and financial condition.」

「Amid concerns about the effects of US-China trade friction and the UK’s withdrawal from the EU, the global spread of a novel pneumonia, which has emerged as a new threat, has become increasingly pronounced. There are serious concerns about its potential impact on the global economy, including disruption to global supply chains related to manufacturing and a decline in global consumption.」

「Although continued aggressive investment by domestic companies in production facilities and service infrastructure has supported conditions that remain firm, the impact on Japan’s manufacturing sector and the global economy of slower economic growth in China resulting from US-China trade friction remains uncertain, and concerns persist regarding the outcome of future negotiations between the two countries and the direction of related monetary policy.」

「The deterioration of the domestic economy resulting from major political and economic fluctuations in Japan and overseas could lead customers to reduce capital investment, delay product development plans, scale back their businesses or bring systems development in-house」