Slower economic recovery due to US-China trade frictions and other factors

「Surging crude oil prices and uncertainty over the supply of crude-oil-derived products following the deterioration of the situation in the Middle East from March 2026 affected new housing starts in the housing-related market, our principal market. In addition, rising prices for interior-related materials and a sharp increase in front-loaded demand in response to those price increases caused a mismatch with our supply volume, resulting in an unstable business environment.」

「In addition to changes in U.S. tariff policy since last year, economic uncertainty has increased since March 2026 due to soaring crude oil prices following the deterioration of the situation in the Middle East and concerns over the supply of petrochemical products.」

「The substantial tariff increases announced by the United States during the period under review are a concern for the economic outlook.」

「Unstable conditions continue, including heightened geopolitical risks such as conflicts in Ukraine and the Middle East, disruptions to international supply chains, soaring resource prices and longer lead times for procuring production materials.」

「The housing construction market, our principal market, saw a gradual decline in new housing starts due to the impact of soaring construction material prices and other factors. In addition, unstable conditions continue, including the unresolved situations in Ukraine and the Middle East, heightened geopolitical risks such as rising tensions in the Taiwan Strait, disruptions to international supply chains, soaring resource prices and longer lead times for procuring production materials.」

「In addition, the uncertain environment continues, including the risk of a deterioration in the global economy due to continued monetary tightening in the United States and the EU, and disruptions to international supply chains resulting from heightened geopolitical risks, including the situation in Ukraine, where there are no signs of a resolution, and rising tensions in the Taiwan Strait.」

「During the cumulative second quarter under review, Japan's economy remained in an uncertain environment due to Russia's invasion of Ukraine, disruptions to international supply chains, soaring prices, particularly for consumer goods, and the double blow of longer lead times and price increases for raw materials and products. Nevertheless, together with the subsiding of the eighth wave of COVID-19 infections, the economy continued to recover gradually.」

「During the cumulative first quarter under review, Japan's economy remained in an uncertain environment due to the impact of the COVID-19 pandemic, referred to below as COVID-19, Russia's invasion of Ukraine, disruptions to international supply chains, significant foreign-exchange fluctuations, soaring prices, particularly for consumer goods, and the double blow of longer lead times and price increases for raw materials and products. However, social activity gradually began returning to pre-COVID levels under the slogan of “no restrictions on activities...,” and the economy entered a gradual recovery trend.」

「However, the difficult operating environment continued, with soaring prices, particularly for resources, and longer lead times for procuring raw materials and products resulting from escalating tensions over Ukraine, disruptions to supply chains due to China's zero-COVID measures, and the rapid, one-sided depreciation of the yen.」

「Since January, the economic outlook has remained uncertain because of supply-chain disruptions and supply constraints caused by the rapid spread of COVID-19, as well as a further surge in resource prices resulting from heightened tensions surrounding the situation in Ukraine.」

「During the cumulative first-quarter period, Japan’s economy remained challenging. In addition to a decline in demand following the rush before the consumption-tax increase that began in October last year and downturns in production and sales caused by natural disasters such as the arrival of major typhoons, exports also lacked momentum because of the impact of the US-China trade friction and other factors.」

「Amid conditions in which a full-scale economic recovery was difficult to anticipate because of concerns over trade friction and other factors, capital investment in streamlining and labor-saving measures to address labor shortages and personal consumption remained firm, and the economy continued to recover gradually, led by domestic demand.」

「External demand and housing starts remained sluggish, resulting in a challenging business environment for the company.」

「During the cumulative second-quarter period, Japan’s economy was at a standstill and the business environment was challenging for the company because of declining external demand and sluggish housing starts, despite positive factors including a lower unemployment rate and continued corporate investment in labor-saving equipment.」

「Economic improvement proceeded at a slow pace because of concerns over economic trends arising from increased uncertainty surrounding overseas conditions, including the impact of the US-China trade friction.」