Thorough Analysis of Last-Minute Demand(by Industry & Product)

◆Most outlooks see the possibilities of the increase in consumption tax beginning in October breaking the back of consumption as being extremely limited. Reasons are (1) consumption maintains a firm undertone, (2) last-minute demand and reactionary decline have been kept under control with various demand leveling measures, and (3) the combined effects of the introduction of a reduced tax rate and free education have kept the negative income effect small. However, recent reports suggest that assuming last-minute demand actually did occur to an unexpected degree, then it goes without saying that (2) doesn’t hold water, while the claim according to (1) cannot be completely valid either.

◆In this report, we make use of currently available macro-economic statistics as well as industry statistics to examine two important facts associated with last minute demand occurring up through the month of September, just before the consumption tax hike went into effect. The first of these is the fact that in comparison to the last two times the consumption tax was increased, the scale of last-minute demand was kept under control to a certain degree. One of the reasons behind this was government measures implemented to keep demand at an even keel, such as reduction of the automobile tax and reward points for using cashless payment.

◆However, the other fact that was discovered is that last minute demand did indeed take place. Last-minute demand occurred most prominently in those areas that fell through the cracks in the government’s countermeasures. Demand grew considerably just before the tax hike went into effect in a variety of areas, including automobiles – especially regular vehicles and light vehicles – while in the area of housing, demand grew for owned dwellings and those built for sale. Meanwhile, in the area of retailing, demand grew especially for department stores, mass retailers of household electronics, and drug stores.

◆Now we must be vigilant regarding the future, with the expectation not only of a reactionary decline in response to last-minute demand, but reaction to last-minute shipments as well, which appeared before last-minute demand. Last-minute shipments were especially prominent in industries including household electronics, pulp, paper & paper products, and chemicals. Though this phenomenon may have contributed to growth initially, that effect will disappear in the future and likely shift into a reactionary decline.