Retired baby boomers have become a driving force in propping up the economy, while exporters are struggling due to the European sovereign debt crisis and the strong yen.
Consumers over the gae of 50 are now key customers for the convenience store industry, whose sales have exceeded year-earlier levels since October. In May, sales rose 6 percent from a year earlier to 792 billion yen ($9.9 billion).
According to Lawson Inc., people aged 50 or older accounted for 35 percent of customers in fiscal 2011, up from about 20 percent several years ago.
Its stores offer a range of vegetables and other fresh products to attract seniors.
Rival Seven-Eleven Japan Inc. also targets elderly people with free home-deliveries for purchases worth at least 500 yen.
The company said July 2 it will begin using electric vehicles for the service from August.
“A growing number of people feel that they cannot freely go a long way for shopping,” President Ryuichi Isaka said.
According to Dai-ichi Life Research Institute, the nation’s baby-boomers, now in their mid-60s and with ample time to spare, have become big spenders.
At JTB Corp., overseas travel bookings between April and June rose 30 percent from a year earlier, with the number of customers 65 or older increasing 50 percent.
“Personal consumption has rebounded from last year when people refrained from traveling after the earthquake,” Chairman Takashi Sasaki said.
In the Bank of Japan’s quarterly business confidence survey for June, released on July 2, the diffusion index for large nonmanufacturers rose to 8, the highest level in four years. It was a fourth consecutive improvement.
The index is calculated by subtracting the percentage of companies reporting unfavorable business conditions from the percentage of companies reporting favorable business conditions.
The diffusion index for large manufacturers was minus 1. The index stayed below zero for three consecutive quarters, although it improved for the first time in three quarters. A negative reading means pessimists outnumber optimists.
The diffusion index for large electronics manufacturers was minus 14.
Masaru Kato, Sony Corp.’s chief financial officer, singled out the turmoil in the European economy and the yen’s appreciation against the euro as primary concerns.
“The yen has stayed at ultra-strong levels for a long time. It is having an extremely strong impact,” Kato told the company’s shareholders meeting on June 27.
Sony will lose 6 billion yen in annual operating profits if the yen strengthens by 1 yen from its projected exchange rate of 105 yen against the euro.
The yen hit 95.59 yen against the euro in early June, its strongest level in more than 11 years.
Hiroyuki Sasa, president of Olympus Corp., told a news conference on July 2 that the company will review manufacturing operations to cope with the strong yen.
One step will be to move much of the production of optical microscopes, its mainstay product, to China.
Olympus’ annual operating profits will decline by 400 million yen for every 1-yen appreciation against the dollar and by 600 million yen for every 1-yen appreciation against the euro.
In May, the value of machine tool orders, a leading indicator of the economy, fell 3 percent from a year earlier to 104.8 billion yen, led by a fall in orders for the European market.
“I wonder how far the credit insecurity in Europe will spread,” said Motohiko Yokoyama, chairman of the Japan Machine Tool Builders’ Association. “I pray it does not affect demand in Asia.”
Exports from other Asian countries to the United States and Europe have already shown signs of slowing.
The domestic economy has been supported by demand for reconstruction following last year's Great East Japan Earthquake, such as increased public works projects in disaster-hit areas. But the one-off reconstruction demand is expected to peak as early as autumn.
Subsidies for the purchase of environmentally friendly vehicles have been another stimulus. But the program will expire as early as August because more than 200 billion yen out of the budgeted 300 billion yen has been paid out.
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