Expansion has become shakier

Revised GDP figures confirmed that the economic recovery continued apace in Q4. However, the more recent monthly activity data suggest that the longest period of uninterrupted expansion since the late 1980s may finally have come to an end this quarter. Household sentiment was dampened by the recent equity market sell-off while the renewed strengthening of the yen has created a headwind for manufacturing firms. And with the economy running into capacity constraints, we reiterate our forecast that growth will slow this year.