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The Small and Medium Enterprise Agency The 146th Survey of SME Business Conditions (October-December 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 October-December 2016 period and the forecasts (DIs) for the January-March 2017 period concerning SME business conditions, sales amounts, ordinary profits, and other data. The SMEA and the organization hereby release the results.

1. Key survey results

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

  1. From October to December 2016, the business conditions DI for all industries was -18.7 (a 0.5 point decrease compared to the previous quarter), meaning the first slight decrease in two quarters.
  2. The business conditions DI for the manufacturing sector was -15.5 (increased by 0.1 points compared to the previous quarter), increasing for two consecutive quarters. Looking at the business conditions DI of each industry, improvements were seen in seven industries, namely the pulp, paper and paper products, transportation equipment, miscellaneous manufacturing, printing, metal products, and furniture and accessories industries, while the DIs for seven other industries, namely the chemical, iron & steel and non-ferrous metals, ceramics, stone and clay products, textile, food, and wood and wooden products industries, decreased.
(Reference) Example of comments from surveyed companies
We have been receiving orders recently, but have a sense of uncertainty about future orders. Trends in customer needs are not stable, and this makes it difficult for us to prepare business investment plans. (Company in the metal products industry in Niigata Prefecture)
  1. We have been receiving orders recently, but have a sense of uncertainty about future orders. Trends in customer needs are not stable, and this makes it difficult for us to prepare business investment plans. (Company in the metal products industry in Niigata Prefecture)
(Reference) Example of comments from surveyed companies
We are still facing a shortage of engineers. We would like to overcome the current difficult situation as early as possible where we are lacking effective, skillful supervisors, despite having plenty of opportunities to receive orders. (Company in the construction industry in Saitama Prefecture)
  1. The financing DI of all industries was -13.9 (a 0.2 point decrease compared to the previous quarter), showing a slight decrease, while the DI measuring long-term financing difficulty and the DI measuring short-term financing difficulty were -3.7 (remaining the same as those of the previous quarter, i.e., 0.0 points) and -1.6 (remaining the same as the previous quarter, i.e., 0.0 points) respectively, both of which remain flat.

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) increased by 3.9 points from the previous quarter to 20.5, showing an increase for the first time in six quarters.

    On the other hand, the unit sales price/per-customer sales DI (calculated in the same way) decreased to -15.6 (a 1.1 point decrease compared to the previous quarter) for two consecutive quarters, resulting in a profit (ordinary profit) DI (calculated in the same way) of -25.4 (a 1.4 point decrease compared to the previous quarter), showing a decrease.
(Reference) Example of comments from surveyed companies
We are facing continued high prices for vegetables, eels and other materials, and this had a negative impact on the number of customers. (Company in the food industry in Aichi Prefecture)
  1. The DI for excess/lack of employees (calculated by subtracting the number of employees lacking from the number of employees in excess, year-on-year comparison) decreased by 0.9 points to -16.2, which shows that labor shortages have grown for two consecutive quarters.

    Looking at DIs by industry, labor shortages have grown in all industries, including the construction industry with a DI of -27.3 (a 4.1 point decrease compared to the previous quarter), excluding the service industry with a DI of -20.0 (remaining the same as the previous quarter, i.e., 0.0 points), which remains flat.

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

Release date

December 13, 2016

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 Innovation

Related website

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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