Was Dentsu lowballing those numbers? In 2007, the online advertising market in Japan totaled about 600 billion yen. This was about a 24% increase over 2006. Dentsu’s report projected the market at 453.4 billion yen in 2007, with a jump over 600 billion yen happening in 2009.

News Corp’s operations will differ significantly from those of Google or Yahoo primarily in that they will not involve search-based ads. Rather, News Corp is looking to set up networks of sites that target similar demographics, and sell ads on behalf of webmasters who happen not to have a sales force at their disposal.

News Corp is looking to draw 10 billion yen annually in ad revenue from Japan within five years time.

The Asahi has done a writeup on this proposed law in English at their website. However, what originally caught my eye was a post entitled simply “Temp workers” by Roy Berman over at the Mutantfrog Travelogue. Roy’s post gives a clear insight to the plight of Japan’s temporary, part-time and contract workers.

Since 1986, the trend has clearly been to relax labor laws in order to allow firms to hire more and more of their workforce as non-salaried workers. In 2004, the trend seemed to have peaked as the government allowed even positions in the manufacturing industry to be filled with temporary workers on contracts up to three years. Reversing this trend will not be easy, but trying to do so might gain some populist support for certain politicians in an forthcoming election cycle that promises to bring social issues to the forefront.

The Economy Watchers survey is measured as an index with a score above 50 indicating a positive view of the economy and a score below 50 representing a pessimistic overall view. It has now clocked in below the 50 mark for 15 consecutive months. June’s 29.5 is the lowest score seen since 27.2 was registered back in October of 2001, and it was the first time the index slipped below 30 since November of that year.

All subindexes of the survey showed a decline, with the services sector showing the strongest downward pressure, by 4.6 points to 30.3. Food and dining related workers reported the lowest score, at 26.8. (more…)

Seiyu lost about 20 billion yen in fiscal 2007 and has been in the red for six straight years. The Nikkei tells us that Seiyu intends to sell more Wal-Mart brand casual clothing at its shops, despite the fact that clothing sales at supermarkets continues to fall - they were down 8.6% in May alone. Seiyu also intends to link up further with Wal-Mart in terms of sourcing products from China. Although this might make economic sense, it also bucks the trend of consumer mistrust of goods produced in China.

Finally, we see that Seiyu intends to carry an “expanded lineup” of flat-panel TVs. Again, supermarkets are generally selling less of this kind of stuff, and it’s hard to imagine Seiyu outpricing, let alone out-marketing the Yodabashi, Bic Cameras and Kojima Denki shops in this area.

Finally, sales per square meter continue to decline at Japan’s supermarkets. Yet again, Seiyu intends to focus its renovation efforts on its larger locations, with 6,000 to 10,000 square meters of shop space.

The survey’s first question might be its most worrying. When asked whether lifestyle conditions now were better than a year ago, only 1.7% responded they were better, while 28.8% said they had not changed and 69% replied that they had gotten worse. In December, 45.5% had reported conditions being worse, while in March that figure had shot up to 60.1%.

When asked if lifestyle conditions would be better a year from now, only 2.2% replied that they expect improvement, while 36.9% expected no change and 60.5% saw things getting worse. In March, 47.3% had said they expected conditions to worsen.

When asked about income, 7.7% reported it had improved over the past year, while 46.4% reported worsening conditions. Only 5.9% expect to see an increase in income over the coming year.

Back to prices: When asked what percentage increase they expected, the median reply came to a 7% increase in consumer prices over the coming year. That answer was 2% higher than the previous survey. Interestingly, respondents anticipating a fall in land prices increased, with 29.8% saying they expect a fall in prices while 22.4% say they expect an increase.

Although the survey does not go into great detail over consumers’ feelings on the economy and lifestyle conditions, we do know that Japan’s core (minus fresh food and energy) consumer prices still look deflationary (Our recent post on that is here, and Claus Vistesen has further explored the matter here). Consumers have been stung primarily by higher energy and food costs, and firms seem yet to have passed these costs full-bore to the consumers in other areas.

Do Japan’s workers and consumers have much justification in this pessimism? As Claus points out, “The amount of small-cap companies, who constitute 70% of the Japanese workforce, filing for bankruptcies rose 18% in the year ending March.” It’s difficult to imagine wage growth assuming an overall trend in such an environment, and thus one is forced to wonder whether non-energy and food price hikes are only a matter of time.

As one would expect, the fund made money from its investments in domestic government bonds, but lost about 7.5 trillion yen in equities positions both at home and overseas. This was the largest loss ever incurred by the pension fund, which has been investing full-scale in financial markets since 2001.

According to the Nikkei, an LDP panel has proposed taking 10 trillion yen out of the nation’s Government Pension Investment Fund (GPIF), which currently oversees about 150 trillion yen in assets. About two-thirds of this money is held in Japanese government bonds, while the rest is in overseas government bonds and both domestic and foreign equities.

The interesting part of the proposal is what follows. As the Nikkei puts it:

the LDP panel urged the government to set up a state-owned asset management firm that would manage about 10 trillion yen on behalf of the GPIF. The proportions of the different types of assets would remain unchanged, but the fund would be staffed by financial professionals, who would be authorized to invest more aggressively than the GPIF.

The proportions would remain unchanged? Why force an SWF to put about two-thirds of its funds into Japanese government bonds? Oh yeah, we know the answer to that one already. We do need to keep in mind that Japan’s pension fund lost money on its investments last year.

It seems as though the Ministry of Finance has successfully kept the government’s hands away from the nation’s foreign reserves. They’re going to deplete the pension reserves first…

On a side note, the Ministry of Finance has been bossing the government around to quite an extent recently, especially over budget items, including education-related expenditures (more details to follow soon) and cutting in wasteful spending at the Foreign Ministry (which should be done). Can Fukuda stand up to the MOF? Is this revenge for not getting through an MOF Old Boy as Governor of the Bank of Japan? It’s starting to look like Mr Abe being laid to waste by the Ministry of Health, Labor and Welfare all over again…

The shipping, automotive, machinery and insurance industries all felt the sting of decline. Now it’s time to see if the dollar can hold above that 105 position against the yen…

May was thus the third consecutive month with a fall in consumer spending, following April’s 2.2% decline and a drop of 1.6% in March. According to the Statistics Bureau, spending at households with two or more people came to 288,128, down 3.2% from a year ago. Income at households with a salaried worker as head of household came to 435,076 yen, which was down 0.6% from a year ago, while spending at workers’ households was at 315,152 yen, down 0.9% from last year.

Here’s a breakdown of spending per category, along with changes against May of last year: (more…)