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Small and Medium Enterprise Agency The 145th Survey of SME Business Conditions (July-September 2016) is Released

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 from commerce and industry, chambers of commerce, and researchers from the National Federation of Small Business Associations.

The Small and Medium Enterprise Agency (SMEA) and the organization jointly compiled the business achievements (diffusion indices, or DIs) of SMEs for the July-September 2016 period and the forecasts (DIs) for the October-December 2016 period concerning SME business conditions, sales amounts, ordinary profits, and other data. The SMEA and the organization hereby release the results.

1. Key points of survey results

The recent business conditions of small and medium enterprises show signs of picking up, while some sectors appear to remain stagnant.

1) From July to September 2016, the business conditions DI for all industries was -18.2 (an increase of 1.3 points compared to the previous quarter), having increased for the first time in three quarters.

2) The business conditions DI for the manufacturing sector was -15.6 (an increase of 1.3 points compared to the previous quarter), having increased for the first time in four quarters. Looking at the business conditions DI of each industry, improvements were seen in nine industries, including: iron & steel and non-ferrous metals; chemicals; transportation equipment; metal products; electrical & information communication equipment and electronic parts; and machinery equipment, while the DIs decreased for five industries, including: printing; pulp; paper and paper products; textile; and wood and wooden products.

  • (Reference) Example of comments from surveyed companies
    • We could not help but to temporarily close our plants due to the difficulty in procuring electronic parts because of the influence of the earthquakes in Kumamoto Prefecture. However, we have been succeeding in procuring new parts gradually since August 2016 and are returning to normal production activities.
      (Company in the electrical & information communication equipment and electronic parts industry in Fukuoka Prefecture)

3) The business conditions DI of the non-manufacturing sector was -19.0 (an increase of 1.4 points compared to the previous quarter), having increased for the first time in three quarters. Looking at the business conditions DI of each industry, it increased in the following sectors: construction, wholesale, and retail, while it decreased in the services sector.

  • (Reference) Example of comments from surveyed companies
    • Since we were favored by good weather and the temperature stayed relatively high in July and August, sales of ice cream, soft drinks, beer, ready-made noodles, etc. were brisk, contributing to an increase in overall sales.
      (Company in the retail industry in Miyazaki Prefecture)

4) The financing DI of all industries was -13.7 (an increase of 0.2 points compared to the previous quarter), having increased for the first time in three quarters, while the DI measuring long-term financing difficulty and the DI measuring short-term financing difficulty were -3.7 (up 0.8 points compared to the previous quarter) and -1.6 (up 0.6 points compared to the previous quarter) respectively, showing improvements.

2.Topics

1) This quarter, the materials/goods unit purchase price DI (calculated by subtracting the number of items that decreased from the number of those that increased, year-on-year comparison) decreased by 4.3 points from the previous quarter to 16.6, decreasing for the fifth consecutive quarter.

On the other hand, the unit sales price/per-customer sales DI (calculated in the same way) also decreased to -14.5 (a decrease of 1.1 points compared to the previous quarter). Also, the profit (ordinary profit) DI (calculated in the same way) was -24.0 (an increase of 0.1 points compared to the previous quarter), having slightly improved.

2) The DI for excess/lack of employees (calculated by subtracting the number of items for which employees are lacking from the number of those for which employees are in excess, year-on-year comparison) in all industries decreased by 2.0 points to -15.3, which shows that labor shortages have grown for the first time in three quarters.

Looking at DIs by industry, labor shortages have grown in all industries, including the construction industry with a DI of -23.2 (a decrease of 4.4 points compared to the previous quarter) and the manufacturing industry with a DI of -12.0 (a decrease of 3.5 points compared to the previous quarter).

  • (Reference) Example of comments from surveyed companies
    • We are facing extreme difficulties in ensuring employment and cannot secure long-term, stable employment. This situation drives us to bear a severe burden of high expenditures on advertisement to attract new staff as well as to face serious financial burdens.
      (Company in the food industry in Chiba Prefecture)

Note: DIs are calculated on a seasonally-adjusted quarter-on-quarter basis unless otherwise specified.

Release date

September 29, 2016

Divisions 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 Innovation

Related Information

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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