Auto Sales Decline, Wage Gains Slows

123jump.com Staff
01 Sep, 2008
New York City

Auto sales in August declined and are likely to fall for the year. Toyota, Honda and Nissan fell between 2% and 3% in trading. A day ago, Yasuo Fukuda, the prime minister of Japan resigned after months of trying to cobble a consensus on economic policites and political agenda that will lower government spending. Taro Aso is likely to lead LDP party election and may be voted as a replacement.

[R]5:00AM New York, 7:00PM - Wages gained 0.3% in July after rising at 0.4% in June.[/R]

Stocks in Japan fell on the news that the U.S. consumer spending slid in July and domestic wage rise in Japan fell in the month from the previous month. Sales of automobiles and buses declined in August and for the year are likely to fall from a year ago.

Market Sentiment

In Tokyo trading Nikkei 225 slumped 1.83% or 238.69 to 12,834.18, and the broader Topix Index declined 1.9% or 24.07 to 1,230.64.

In the first section of the Tokyo Stock Exchange 6.4 billion shares worth 675 billion yen were traded and in the second section 146 million shares valued at 1.6 billion yen changed hands.

Of the Nikkei 225 stocks 24 rose, 200 declined, and 1 was unchanged. Citizen Holdings led advancers in the index shares with a rise of 8.70% followed by Nippon Sheet Glass increasing 5.66%.

Wages Rise 0.3% in July

The Ministry of Health, Labour and Welfare reported on its Web site today in the provisional report of the monthly labour survey that total cash earnings increased 0.3% to 388,315 yen in July compared to 0.4% increase in June.

In the review period, contractual earnings advanced 0.6% to 271,438 yen, scheduled cash earnings gained 0.6% to 251,871 yen, non-scheduled cash earnings increased 1.1% to 19,557 yen, but special cash earnings slid 0.6% to 116,887 yen.

According to the report, total hours worked rose 0.8% to 154.8 hours, while scheduled hours worked edged up 1% to 144 hours. However non-scheduled hours worked plummeted 1% to 10.7 hours.

Regular employees in July also increased 1.5% to 45.1 million, full-time employees spiked 1.6% to 33.4 million and part-time employees rose 1% to 11.7 million.

U.S. Consumer Spending Falls 0.4%

The U.S. Commerce Department reported on its Web site on Friday last week that consumer spending declined 0.4% in July from 0.1% that was realized in the previous month.

Disposable personal income dipped 1.7% from 2.6% in June, while the personal consumption expenditures inflation index, which gauges inflation rose 0.6% in the month under review from 0.7% a month earlier.

In addition, the core PCE index, that excludes food energy, jumped 0.3% in July.

Spending on non-durable goods, including food and energy, fell 0.9% and purchases of durable goods dropped 1.6% from 1.4% in June owing to slowing demand for cars as oil prices soar.

August Auto Sales Decline

For the month of August sales of cars, buses and trucks fell 15% from a year ago to 193,902 units according to the latest data released by Japan Automobile Dealers Association and reported by Bloomberg News. Auto sales including mini-cars are likely to fall to 5.32 million from5.35 million in 2007.

Passenger car and commercial vehicle demand in Japan in 2007 totaled 5.35 million units, a decline of 6.7% from the previous year. Total passenger car sales dropped 5.2% to 4.40 million units, marking a third consecutive yearly decline. While the standard car segment increased 6.0% to 1.30 million units, sales of small cars and mini-cars decreased 13.3% and 4.0%, to 1.65 and 1.45 million units respectively. Truck sales fell 13.2% from the previous year to 938,000 units, and bus sales dropped 11.3% to 16,000 units.

In August Toyota sales fell 18.4% to 83,315 units, Honda sales rose 16% to 27,448 units and Nissan sales fell 19% to 31,470 units.

Sales of mini-vehicles dropped as well, according to the latest data released by Japan Mini Vehicles association. The market leaders Suzuki Motor sales rose 0.4% to 38,306 units and Daihatsu Motor Company sales increased 5.3% to 38.679.

Gainers & Losers

Citizen Holdings led advancers in the Nikkei 225 index shares with a rise of 8.70% followed by gains in Nippon Sheet Glass of 5.66%, in Ebara Corp. of 4.67%, in Japan Steel Work of 3.37%, and GS Yuasa Corp. of 3.20%.

Showa Denko led decliners in the Nikkei 225 index shares with a fall of 6.51% followed by losses in Konica Minolta Holdings of 5.20%, in Sekisui House of 5.08%, in Shimizu Corp. of 4.96%, in Denso Corp. of 4.96%.

Shipping companies slid after the Baltic Dry Index fell 1.7% on Friday last week. Kawasaki Kisen plunged 4.86% and Mitsui OSK Lines plummeted 3.06%.

Commodity stocks declined as metal prices retreated. Copper prices fell 0.3% and nickel climbed down 1.3%. Nippon Oil shed 3.79% and Nippon Light Metal tumbled 3.61% as a result.

Also exporters dropped as U.S. consumer spending declined in July. Honda dipped 3.35% and Sharp climbed down 3.14%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 238.69 or 1.83% to 12,834.18, Hang Seng index in Hong Kong decreased 355.58 or 1.67% closed to 20,906.31.ASX 200 index in Australia decreased 17.30 or 0.34% to close 5,118.30. Market of Malaysia was closed today.

The Kospi Index in South Korea decreased 59.81 or 4.06% to close at 1,414.43, SET index in Thailand closed lower 9.22 or 1.35% to 675.22 and JSE Index in Indonesia decreased 1.32 or 0.06% to 2,164.62. The Sensex index in India decreased 66.02 or 0.45% closed to 14,498.51.