TDB Trends Research (Research & Summary for December 2018)

Domestic economy continues
on a weakening trend～ A decline in the manufacturing industry’s performance dueto the slowdown in exports ～e-mail：keiki@mail.tdb.co.jp（Companies researched: 23,059; Valid responses: 9,619; Response rate: 41.7%;
Survey start date: May 2002)

By industry : A manpower shortage accelerated due to year-end demand
being impacted by the slowdown of external demand.

< Overview of December 2018: Weak domestic economy >The economic diffusion index (DI) in December 2018 was 49.4, down 0.1 pointfrom the previous month, and worsened for the first time in two months.
Although there was year-end demand, the manpower shortage accelerated andthe domestic economy continued on a weakening trend, such as a decline in the
manufacturing industry’s performance due to the slowdown in exports, etc.

By size : While “SMEs” worsened, “large enterprises” improved for the
first time in five months.
By region : All ten regions worsened on a year-on-year comparison.
Some regions were also impacted by the warm winter.

< Future outlook: Uncertainty has intensified >While a demand increase due to the hike in the consumption tax and areactionary decline are expected, there are concerns about the slowdown ofexternal demand in China, etc., and how the US-Japan trade negotiations will
progress, so uncertainty has further intensified.

52
51
50

50.9 51.1
50.3 50.4

49.8

49.4

49.0

49.5 49.5 49.4

49.0

49.5 49.4

49.2 49.2 49.4 49.4

49.5 49.6

49.8 49.9 50.1

49
48

48.4
After 1 month

After 3 months

48.4 48.5

After 6 months

47

After 1 year

（Prediction→）
Dec Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
2017
2018
2019
Projected future DI
50.9 51.1 50.3 50.4 49.8 49.4 49.0 49.5 49.5 49.4 49.0 49.5 49.4 49.2 49.2 49.4 49.4 49.5 49.6 49.8 49.9 50.1 48.4 48.4 48.5
Change from December.2018-0.2 -0.2 0.0 0.0 0.1 0.2 0.4 0.5 0.7 -1.0 -1.0 -0.9

46*: Economic DIs are calculated based on the structural ARIMA model, in which economic statistics are incorporated to the ARIMA model.

©TEIKOKUDATABNK,LTD

TDB Economic Trend Research December 2018

1

Economic Diffusion Index (Economic DI)1/2
Ratio to the
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

PrFDious
Month

Total

50.9 51.1 50.3 50.4 49.8 49.4 49.0 49.5 49.5 49.4 49.0 49.5 49.4

Large Firms

53.0 53.2 52.2 52.5 52.2 51.6 51.3 51.8 51.6 51.4 51.4 51.4 51.7

0.3

Small to Medium-sized Firms

50.4 50.5 49.8 49.9 49.3 48.8 48.5 48.9 49.0 48.9 48.4 49.0 48.8

▲ 0.2

Micro Firms

49.8 49.6 49.0 49.2 48.1 48.1 47.6 48.1 48.4 48.4 47.9 48.2 48.2

0.0

▲ 0.1

Ratio to the
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

PrFDious
Month

Agriculture,Forestry,Fisheries

49.2 47.1 45.5 44.4 43.5 44.2 43.3 43.4 45.7 43.8 41.5 40.7 40.7

0.0

Finance48.9 49.6 48.0 50.3 49.4 47.8 47.2 49.5 47.5 48.5 46.2 47.1 46.5

▲ 0.6

Construction

54.2 54.0 53.4 52.9 51.4 51.8 51.9 52.8 53.1 53.8 53.4 53.9 54.1

0.2

Real Estate51.3 52.3 52.1 53.1 50.9 51.0 51.1 50.5 51.1 50.7 49.3 49.3 49.7

0.4

Food,BEWerages,Livestock Feed

44.8 44.0 43.2 41.9 42.9 43.4 43.2 43.1 43.3 42.9 42.0 42.4 43.0

0.6

Textile,Textile Products,Clothing

42.0 39.1 41.3 42.4 42.4 42.7 42.8 42.1 41.8 41.9 41.4 41.6 41.3

▲ 0.3

Construction Materials,Furniture,

Manufacturing

Ceramics,Stone and Clay Products

48.0 46.8 46.2 46.3 45.7 45.8 45.9 46.6 45.6 45.2 46.1 47.5 48.3

0.8

Pulp, Paper and Paper Products

48.7 46.6 44.1 45.8 46.3 43.1 45.2 44.5 44.5 45.4 44.3 46.5 49.3

2.8

Publishing,Printing

35.8 36.4 37.4 37.1 36.2 36.3 33.7 35.0 33.8 34.6 33.2 34.8 35.0

0.2

Chemical

54.1 53.9 53.2 53.8 52.3 51.8 51.6 52.2 51.3 51.4 50.4 51.4 50.2

▲ 1.2

Steel,Nonferrous Metals,Mining

56.3 57.6 55.6 55.6 53.7 53.5 53.3 54.1 54.2 52.8 53.0 54.4 52.5

▲ 1.9

General Machinery

60.8 62.4 62.0 61.2 60.9 60.6 60.3 60.7 59.9 59.1 58.1 57.5 55.9

▲ 1.6

Electrical Machinery

55.7 56.9 56.5 54.8 54.9 53.4 53.4 52.8 52.0 53.3 52.9 52.5 50.5

▲ 2.0Transportation Machinery,Equipment

56.9 57.9 56.6 59.8 57.6 58.4 57.3 56.6 58.7 58.3 56.9 56.4 53.8

▲ 2.6

54.7 57.4 56.2 54.8 57.5 56.6 57.2 55.1 54.8 54.3 53.7 53.4 54.0

0.6

Precision Machinery,
Medical Instruments and Equipment
Other

42.6 43.4 43.1 43.8 43.2 44.3 42.5 41.5 40.7 42.6 42.8 41.8 42.8

1.0

52.1 52.6 51.9 51.6 51.0 50.8 50.4 50.6 50.2 50.0 49.5 50.0 49.2

▲ 0.8

Food,BEWerages

43.5 42.9 42.1 43.0 42.9 42.8 42.4 40.9 41.9 41.3 40.6 41.9 41.1

▲ 0.8

Textile,Textile Products,Clothing

37.4 37.2 35.5 37.2 37.2 36.8 37.3 35.9 37.3 35.1 35.3 33.5 34.3

0.8

46.7 46.2 44.9 44.7 45.0 43.3 44.4 44.8 44.2 44.8 43.9 46.9 47.8

0.9

Total

Construction Materials,
Furniture,Ceramics,
Stone and Clay Products

Wholesale

Paper Products,Stationery,Books

38.4 37.6 34.9 36.8 38.0 37.5 36.2 35.4 36.6 36.9 36.5 38.1 39.3

1.2

Chemical50.7 49.7 49.0 49.1 49.1 49.1 46.8 48.9 48.1 47.1 47.0 47.8 47.7

▲ 0.1

Recycled Resources

58.3 56.2 51.0 51.9 49.5 46.6 50.6 48.2 51.2 47.8 49.4 44.0 47.6

3.6

52.3 53.1 51.9 50.8 49.7 48.2 47.8 48.0 50.3 49.2 49.4 48.8 50.2

1.4

Steel,Nonferrous Metals,
Mining Products
Machinery,Equipment

52.1 52.3 51.4 51.8 51.1 50.6 50.0 50.9 51.0 50.2 49.6 49.9 50.0

0.1

Other

43.7 43.9 42.8 43.8 45.4 43.4 43.3 43.2 42.4 42.4 43.4 44.0 43.9

▲ 0.1

47.9 47.8 46.6 47.1 47.0 46.1 45.7 45.9 46.3 45.6 45.4 46.0 46.3

0.3

Total

©TEIKOKUDATABNK,LTD

TDB Economic Trend Research December 2018

2

Economic Diffusion Index (Economic DI)2/2
Ratio to the
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

PrFDious
MonthRetailFood,BEWerages

45.3 44.1 45.6 46.1 47.4 45.7 45.2 44.5 45.3 45.7 44.4 45.5 42.8

▲ 2.7

Textile,Textile Products,Clothing

35.6 41.0 38.2 37.3 38.9 36.7 32.1 34.6 32.7 30.6 32.7 31.3 34.0

2.7

Drugs,Sundries

44.4 46.4 45.7 47.2 44.9 47.1 42.9 41.0 41.3 40.2 38.4 42.4 44.4

2.0

Furniture

40.7 43.9 35.2 35.0 36.7 35.2 38.3 38.3 37.0 37.0 37.9 37.5 35.4

▲ 2.1

47.7 41.9 40.4 45.7 46.5 40.2 41.9 45.5 43.7 42.8 40.6 39.7 43.1

3.4

Electrical Household Appliances,
Information Machinery and Equipment
Motor Vehicles,Motor Vehicle Parts

44.2 49.2 47.8 48.3 48.2 43.5 42.9 45.0 43.5 46.1 40.8 41.5 42.2

0.7

Special Merchandise

41.5 41.9 42.5 42.9 41.0 39.7 39.7 40.7 39.1 39.1 39.7 43.3 43.2

▲ 0.1

Various Merchandise

46.4 46.9 46.0 47.5 49.6 44.1 44.2 48.2 46.5 43.6 46.4 43.6 44.7

1.1

Other

50.0 50.0 43.3 41.7 36.1 41.7 33.3 36.1 40.5 38.9 41.7 38.1 35.7

▲ 2.4

Total

Transportation,Warehousing

Service43.4 44.3 43.8 44.8 44.6 42.0 41.3 42.7 41.7 41.6 40.9 42.1 42.3

0.2

52.5 50.7 49.6 50.5 50.0 49.3 48.7 50.3 50.3 49.5 48.7 50.1 50.5

0.4

Restaurants

44.9 45.2 43.6 44.2 44.7 45.0 42.5 42.7 42.5 39.3 37.0 37.6 40.7

3.1

Postal,Telecommunications

56.4 56.1 59.1 57.7 56.9 50.0 54.5 55.6 55.0 56.1 59.7 57.1 54.5

▲ 2.6

Electricity,Gas,Water,Heat54.2 60.4 58.3 61.1 54.2 56.3 57.4 56.3 57.4 59.3 56.7 57.1 61.9

4.8

Leasing,Rentals

55.9 56.9 56.0 56.0 55.2 51.5 52.9 54.5 54.2 55.9 56.5 57.1 55.7

▲ 1.4

Lodging, Hotels

48.0 46.9 48.7 52.0 51.7 50.6 50.0 45.2 46.6 43.6 41.0 45.5 45.7

0.2

Recreation

42.2 41.7 42.2 42.5 41.5 39.5 40.9 39.8 40.0 39.9 35.5 40.6 39.3

▲ 1.3

Broadcasting

47.6 47.6 47.4 47.0 39.7 37.2 40.3 42.3 38.5 41.7 40.5 40.0 36.7

▲ 3.3

Maintenance,Guarding,Testing

50.3 51.5 50.7 51.1 49.9 50.2 48.5 50.5 52.3 51.8 51.4 51.6 50.7

▲ 0.9

Advertising

41.5 46.1 42.3 43.4 44.2 43.0 40.2 41.7 41.4 42.3 42.3 41.2 41.7

0.5

Information

58.4 59.4 58.8 58.6 59.4 58.4 58.8 58.7 59.1 59.7 59.8 60.7 59.3

▲ 1.4

Labor Dispatching

57.9 58.6 56.5 57.9 57.8 59.0 59.1 59.3 59.2 58.0 59.4 58.8 59.0

0.2

Special Services

55.5 53.4 53.1 54.3 53.6 53.7 54.6 54.8 55.3 53.9 55.0 54.6 53.6

▲ 1.0

Medical,Welfare,Public Health48.3 47.6 48.6 48.1 48.8 48.0 46.8 46.1 48.2 48.3 48.8 48.3 47.4

▲ 0.9

Education

42.4 45.1 41.7 44.2 42.4 42.8 40.6 42.6 46.5 46.4 43.8 43.5 46.2

2.7

Other

52.6 51.6 51.3 51.8 50.7 50.8 50.0 51.3 50.2 51.6 49.3 49.8 52.0

2.2

53.0 53.4 52.7 53.1 52.8 52.1 52.0 52.4 52.8 52.9 52.9 53.2 52.7

▲ 0.5

48.2 47.8 47.9 50.8 49.2 50.0 46.3 46.1 45.0 46.3 46.2 45.3 46.6

1.3

Total

Other

Ratio to the
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

PrFDiousMonthHokkaido

48.4 47.8 45.7 46.6 46.2 45.8 46.5 46.6 47.5 44.3 43.9 45.2 45.2

0.0

Tohoku47.9 46.9 46.1 46.4 45.7 45.0 44.2 46.8 46.6 46.4 45.9 46.5 45.4

▲ 1.1

kitakanto

52.9 52.3 51.7 51.4 50.7 49.8 49.4 50.6 50.0 50.0 49.0 48.5 48.5

0.0

minamikanto

51.3 51.8 51.0 51.5 50.7 50.3 50.2 50.3 50.0 50.4 49.8 50.4 50.1

▲ 0.3

Hokuriku

49.9 49.7 47.7 48.5 48.7 48.5 48.7 49.4 49.8 49.3 49.4 49.3 48.6

▲ 0.7

Tokai

52.5 52.6 52.5 52.3 51.9 51.9 50.9 51.6 51.8 51.4 51.3 51.8 51.8

0.0

Kinki

50.8 51.1 50.3 50.0 49.7 48.8 48.4 48.6 49.4 48.9 48.8 49.7 49.7

0.0

Chugoku50.6 50.8 50.1 49.6 48.7 48.7 47.9 47.0 47.1 48.0 48.6 48.5 48.7

0.2

Shikoku

49.0 49.4 48.5 48.4 48.2 47.8 47.2 47.5 47.9 47.0 47.6 47.2 48.4

1.2

Kyushu51.7 51.7 51.8 51.7 51.4 50.4 49.8 50.9 50.6 50.8 49.1 50.6 50.7

0.1

©TEIKOKUDATABNK,LTD

TDB Economic Trend Research December 20183

Appendix
1.Research Subjects(Companies Researched 23,059 ; Valid
responses: 9,619 ; Response rate: 41.7%)
Appendix

1.Region
Hokkaido
TohokukitaKantominamikanto
Hokuriku

512
607
718
3,075
523

Kyushu

1,074
1,594
546
280
690

Total

9,619

Tokai

Kinki
Chugoku
Shikoku

2.Industry (10 Industries 51 Lines of business)
Agriculture,Forestry,Fisheries

54

Finance

118

Construction

1,433

Real Estate

286

3,223

Wholesale
3,959

67

Textile,Textile Products,Clothing

26

Drugs,Sundries

21
8

Furniture

Food,Beverages,Livestock Feed

300

Textile,Textile Products,Clothing

107

Motor Vehicles,Motor Vehicle Parts

Construction Materials,Furniture,Ceramics,Stone and Clay Products

207

Special Merchandise

128

94

Various Merchandise

41

Pulp, Paper and Paper Products

Manufacturing

Retail
480

Food,Beverages

Electrical Household Appliances,Information Machinery and Equipment

64

Publishing,Printing

170

Chemical

392

Transportation,Warehousing

417

Steel,Nonferrous Metals,Mining

464

Restaurants

43

General Machinery

419

Telecommunications

11

Electrical Machinery

304

Electricity,Gas,Water,Heat7

Others7

Transportation Machinery,Equipment

96

Leasing,Rentals

108

Precision Machinery,Medical Instruments and Equipment

71

Lodging, Hotels

23

Others83

Recreation

53

Food,Beverages

333

Textile,Textile Products,Clothing

173

Construction Materials,Furniture,Ceramics,Stone and Clay Products

310

Advertising

92

90

Information

425

Paper Products,Stationery,Books
ChemicalRecycled Resources

Service
1,384

15

Broadcasting
Maintenance,Guarding,Testing

Labor Dispatching

52

28

Special Services

250
101

Steel,Nonferrous Metals,Mining Products

281

Medical,Welfare,Public Health

Machinery,Equipment854

Education

Others322

Others

26
156
39
Total

Large Firms

1,971

20.5%

Small to Medium-sized Firms

7,648

79.5%

micro Firms

2,532

26.3%

Total

9,619

100.0%

156

260

Others

3.Size34©TEIKOKUDATABNK,LTD

9,619

TDB Economic Trend Research December 20184

An economic DI of 50 is the point separating good and bad, so a DI over
50 means “good,” and below 50 means “bad.” (The numbers are rounded
off to one decimal place.) No weight is given according to a company's size,and calculations are made on the basis of “one company, one vote.”

2.Research Items*Business Confidence (current, in 3 months, in 6 months, in 1 year)*Business Conditions (sales, purchasing and selling unit price, inventory, capacity
utilization ratio, number of employees, overtime work hours).Size Classification

3.Research Period and Methodology

Internet-based survey conducted December 14 2018 – January 7 2019

Industry
Manufacturing andOther Industries*

The explanation of the Economic Diffusion Index
Research Purpose/Researched Terms
TDB Economic Trend Research (started from May 2002) is a monthly
statistical survey conducted for over 20,000 nationwide corporations on theirgeneral business activities including the current condition and future outlookof the industry business performance and operating climate. The primary
purpose of such a survey is to assess the current state of Japan’s economy.
Selection of the Subject Corporations
Companies of all sizes in all domestic industries are eligible to participate in
the survey.

Wholesale Trade

Retail Trade

Service**

Large Firms

Small to Medium-Sized Firms(Micro Firms included)

Capital: More than 300 million yen
andNo. of Employee: Over 300
Capital: More than 100 million yen
andNo. of Employee: Over 100
Capital: More than 50 million yen
andNo. of Employee: Over 50
Capital: More than 50 million yen
andNo. of Employee: Over 100

Capital: Below 300 million yenor
No. of Employee: Below 300
Capital: Below 100 million yenor
No. of Employee: Below 100
Capital: Below 50 million yenor
No. of Employee: Below 50
Capital: Below 50 million yenor
No. of Employee: Below 100

Micro Firms

No. of Employee: Below 20

No. of Employee: Below 5

No. of Employee: Below 5

No. of Employee: Below 5

Note1: Large Firms refer to companies that rank in the top 3% in terms of sales volume according to the type of business, among small to midium-sizedcorporations excluding micro firms, which are defined in Small and Medium Enterprises Basic Act.
Note2: Small to Medium-Sized Firms refer to companies that rank in the bottom 50% in terms of sales volume according to the type of business, among
those not categorized as small to midium-sized corporations in Small to Medium-Sized Enterprises Basic Act.

DI Calculation
The DI（Diffusion Index）is calculated by multiplying the number of responses
for each assessment category by the number given in parentheses in thetable below, to a seven-level assessment rated by companies.
Selection category Extremely good

good

fairly goodneither good nor bad

fairly badbadvery badpoints

6

5

4

3

2

1

0

number of responses
for each category

N6

N5

N4

N3

N2

N1

N0

Economic DI
Total of (Points for each category × Number of responses for each category) 1
× × 100＝
Number of valid responsesN
6

∑
≡

6
i ≡0

i × Ni

N

×

1
× 100
6

©TEIKOKUDATABNK,LTD

TDB Economic Trend Research December 20185