Japan faces higher risk of job losses while new hiring slows

Japan may see new hirings slow and job losses increase, particularly among service-sector firms struggling to cope with the intensifying pain of the coronavirus crisis, according to an analysis of survey data by a private think-tank.

Dai-ichi Life Research Institute conducted the analysis on the government’s March confidence survey, involving taxi drivers, hotel and restaurant staff - who are known as “economy watchers”.

The analysis, using a technic known as “text mining”, showed that the word “job” was frequently used in combination with the word “adjustment”.

The combination of the terms “hiring activity” and “stagnation” also appeared many times in the survey.

Both these combinations did not show up in the government’s February survey, a sign that the coronavirus may be forcing an increasing number of retailers to consider job cuts, Dai-ichi Life Research said in a report.

Words like “subsidies” and “consulting for government help” were also used in tandem with the term “jobs” as frequently as when the 2008 collapse of Lehman Brothers triggered a global financial crisis, the institute said.

“The pandemic may hurt manufacturers. But for this crisis, there’s a high chance non-manufacturers could lead the cycle where worsening business sentiment leads to fewer jobs,” said Takuya Hoshino, an economist at Dai-ichi Life Research.

The system used to examine the survey, text mining, is a type of data analysis that uses computer technology to process vast amounts of text information to extract trends or identify patterns of behaviour on economic activity.

The economy-watchers survey, released last week, showed service sector sentiment hit a record low in March, as the coronavirus crisis prompted travel bans and hurt consumption in a major shock to the economy.

Japan’s jobs data for March will be released on April 28.

Job creation has been touted by Prime Minister Shinzo Abe as one of the key successes of his “Abenomics” stimulus policies deployed in 2012.

Japan is on the cusp of a recession, as the outbreak adds to woes besetting an already fragile recovery. Japan last week declared a state of emergency in major population centres to combat the virus, urging citizens to stay at home, some facilities to shut down and restaurants to close early.

Movement of people around Tokyo station fell 85.8 per cent on April 12 from levels before the government’s state of emergency announcement on April 7, according private big data firm Agoop.

The number of coronavirus cases in Japan is at least 7,400, with 137 deaths, public broadcaster NHK said.

Meanwhile the Japanese shares fell on Monday as investors worried about the impact of the coronavirus outbreak on corporate earnings, though stocks of key oil exploration firms rose after major producers finally agreed their biggest-ever output cut.

The benchmark Nikkei average dropped 2.3 per cent to 19,043.40 on subdued activity.

The volume of shares traded on the main board valued at only 1.65 trillion yen ($15.3 billion), its lowest in almost three months, largely due to the paucity of foreign investors due to the Easter holidays.

Stocks of companies that have postponed their earnings announcements due to the pandemic came under pressure. Nidec Corp fell 1.3 per cent after the electric-motor maker said it will delay its earnings announcement, which was originally scheduled on April 24, but gave no new date.

Sumitomo Electric Industries Ltd shed 3.7 per cent after the company also postponed its earnings report by one week to May 19.

Bucking the trend, Yaskawa Electric Corp added 0.2 per cent as the company provided a quarterly projection after suspending its earnings guidance for its current financial year.

The industrial robot producer forecast an operating profit of four billion yen for the March-May period, even though some analysts had projected an operating loss for the quarter.

Aeon Co Ltd gained 3.0 per cent after the company said its operating profit may drop as much as 77 per cent in the year ending February as the virus outbreak hits global consumer spending and forces some of its stores to close.

Analysts said the market liked the fact that the supermarket giant provided a profit guidance even under the current difficult circumstances, while many other firms said they could not give forecasts, citing the ongoing fallout from the COVID-19 respiratory disease.

Reuters