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Japan Flash PMIs (Jan. 2022)

The January flash PMI suggests that the manufacturing sector continues to expand at a rapid pace, but there are mounting signs that firms are passing on higher input costs to consumers. By contrast, activity in the services sector has slumped.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Japan Economics Weekly

Recovery will continue to disappoint

The slump in industrial output and the stagnation in real retail sales in May has prompted us to lower our estimate of Q2 GDP growth. While the easing of the lockdown in Shanghai will contribute to a rebound in motor vehicle output over coming months, the bigger picture is that supply shortages remain intense. And with external demand softening, Japan’s economy won’t recover as rapidly this year as most anticipate.

1 July 2022

Japan Data Response

Tankan (Q2), Labour Market (May) & Tokyo CPI (Jun.)

Today’s Tankan survey suggests that while the services sector is benefitting from the easing of virus restrictions, the outlook for the manufacturing sector is worsening. Meanwhile, the labour market didn’t tighten any further in May and inflation edged down in Tokyo in June, but we still expect the unemployment rate to fall further and underlying inflation to creep higher over coming months.

1 July 2022

Japan Data Response

Japan Industrial Production (May 2022)

The plunge in industrial output in May suggests that Japan’s recovery is disappointing yet again. The upshot is that it will take until the second half of the year for GDP to surpass its pre-virus level. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

30 June 2022

More from Marcel Thieliant

Japan Data Response

Japan Consumer Prices (Dec. 2021)

Consumer price inflation reached a two-year high of 0.8% in December, but with energy prices set to fall back, we think that it will peak around 1% by mid-year.

21 January 2022

Australia & New Zealand Economic Outlook

RBNZ will ease even as RBA starts to tighten

Australia’s Omicron outbreak will hold back the recovery this quarter, but there are plenty of reasons why Australia will outperform New Zealand over the next couple of years. As the labour market has tightened more rapidly than we had anticipated, we’ve brought forward our forecast for the first RBA rate hike from February 2023 to November 2022. By contrast, we expect New Zealand’s housing market to come off the boil this year which should prompt the Reserve Bank of New Zealand to end its hiking cycle at 2.0% this year and start cutting interest rates in 2023. Our views on monetary policy are more dovish than what’s priced into financial markets so we expect 10-year government yields to be little changed. What’s more, we expect the New Zealand dollar to weaken against the Australian dollar.

20 January 2022

Japan Economics Update

BoJ unlikely to lift interest rates anytime soon

The Bank of Japan today upgraded its assessment of inflation risks to “broadly balanced” for the first time since 2014. However, it reiterated its pledge to keep expanding the monetary base until inflation exceeds 2% and also signaled that it will keep interest rates low. With inflation set to fall well short of the BoJ’s 2% target for the foreseeable future, the Bank won’t be able to tighten policy.

18 January 2022
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