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Small and Medium Enterprise AgencyThe 138th Survey of SME Business Conditions (October–December 2014)

The Survey of SME Business Conditions is a quarterly survey conducted by the Organization for Small and Medium Enterprises and Regional Innovation, targeting about 19,000 small and medium enterprises (SMEs) across Japan in cooperation with business management advisors of the societies of commerce and industry and chambers of commerce as well as researchers of the National Federation of Small Business Associations.

The Small and Medium Enterprise Agency and the organization jointly compiled the business achievements (DI) of SMEs in the October–December 2014 period and the forecasts (DI) for the January–March 2015 period concerning SME business conditions, sales amounts, ordinary profits and other elements. They hereby release the results.

1. Key survey results

The recent business conditions of small and medium enterprises appear to be pausing, while some industries show signs of picking up.

  • The business conditions DI (diffusion index) of all industries show an increase in the negative margin (down 0.7 points from the previous quarter).
  • Looking at the business conditions DI of each industry, the negative margins of both the manufacturing sector and the non-manufacturing sector increased (down 2.1 points and 0.4 points from the previous quarter respectively).
  1. From October to December 2014, the business conditions DI of all industries was minus 19.4 (down 0.7 points from minus 18.7 in the previous quarter), which indicates that the negative margin increased.
  2. The business conditions DI of the manufacturing sector was minus 14.4 (down 2.1 points from minus 12.3 in the previous quarter), which indicates that the negative margin increased. Looking at the business conditions DI of each industry, the negative value turned into a positive value in the chemical industry, and the negative margin decreased in three industries, namely, the transportation equipment, electricity/information and telecommunication equipment, and electronic parts industries. On the other hand, the positive value turned into a negative value in the machinery industry, and the negative margin increased in nine industries, including the pulp, paper and paper products, wood and wood products, and metal products industries.
  3. The business conditions DI of the non-manufacturing sector was minus 21.0 (down 0.4 points from minus 20.6 in the previous quarter), which indicates that the negative margin increased. Looking at the business conditions DI of each industry, the negative margin decreased in the construction sector, while the negative margin increased in three sectors: the wholesale, service, and retail sectors.
  4. The financing DI of all industries was minus 15.3 (down 0.3 points from minus 15.0 in the previous quarter), while the DI measuring long-term financing difficulty was minus 6.9 (down 0.1 points from minus 6.8 in the previous quarter), and the DI of short-term financing difficulty was minus 4.1 (down 0.4 points from minus 3.7 in the previous quarter), all of which indicate that the negative margins increased.

2. Topics

  1. In this quarter, the positive margin of the materials/goods purchase unit prices DI (calculated by subtracting "decrease" from "increase"; year-on-year comparison) was 45.3 (down 1.2 points from 46.5 in the previous quarter), which indicates that the positive margin decreased, but it still remains at a high level. The unit sales price/per-customer sales DI (calculated by subtracting "decrease" from "increase"; year-on-year comparison) was minus 12.1 (down 2.0 points from minus 10.1 in the previous quarter), which indicates that the negative margin increased. In addition, the profit (ordinary profit) DI (calculated by subtracting "decrease" from "increase"; year-on-year comparison) also deteriorated by 0.8 percentage points, from minus 27.9 in the previous quarter to minus 28.7, which indicates that the negative margin increased. A price increase in raw materials and other factors due to the depreciation of the yen should be closely and continuously monitored.
  2. The DI for excess/lack of employees in all industries (calculated by subtracting "lack" from "excess"; year-on-year comparison) has been decreasing from mid-2013. In this quarter, some industries turned upward from the previous quarter, but looking at an all-industries basis, it deteriorated by 0.8 percentage points from minus 11.7 in the previous quarter to minus 12.5, showing an increasing sense of labor shortage. Looking at each industry, the construction and service industries particularly showed a strong sense of labor shortage, indicating minus 24.7 and minus 15.7 respectively.

The DI is calculated on a seasonally-adjusted quarter-on-quarter basis unless otherwise specified.

Reference

Time series of the business conditions DI (diffusion index) of all industries ("improvement" minus "worsening"; seasonally-adjusted values on a quarter-on-quarter basis)

2013 2014 Changes from
the previous quarter
1Q 2015
Forecasts
Changes from
the current quarter
2Q 3Q 4Q 1Q 2Q 3Q 4Q
All industries -18.3 -18.4 -13.7 -11.1 -23.2 -18.7 -19.4 -0.7 -15.5 3.9
Manufacturing -17.2 -14.6 -6.7 -2.6 -18.3 -12.3 -14.4 -2.1 -9.0 5.4
Non-manufacturing -18.6 19.5 -16.0 -14.0 -24.7 -20.6 -21.0 -0.4 -17.7 3.3

Release date

December 15, 2014

Division in charge

  • Research Office, Policy Planning Division, Business Environment Department, Small and Medium Enterprise Agency
  • Business Support Information Center, Organization for Small and Medium Enterprises and Regional Innovations

Related Information

Data Reports

Ministry of Economy, Trade and Industry
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