Japan Flash PMIs (Nov. 2021)

November’s flash PMI points to a rebound in industrial output amidst early signs that supply shortages are diminishing. But while the services sector is now on the mend, the recovery there is lacking vigour.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
Continue reading

More from Japan

Japan Chart Book

Hit to output from staff absences could be hard

Skyrocketing infections and a 10-day isolation requirement for close contacts of positive cases have resulted in a wave of staff absences in Japan. Domestic carmakers already struggling with chip shortages appear to have been among the first victims of strict isolation rules. Both Toyota and Honda were forced to close some production lines at the end of last week due to staff absences. Based on the National Institute of Infectious Disease’s analysis suggesting that each positive case has up to five close contacts, Nikkei estimates that 1.8 million people could be self-isolating by the end of the month. Assuming those in and out of the workforce are equally affected, that would translate into 1.3% of workers in Japan self-isolating. Despite a much lower caseload, that would be similar to staff absences in other advanced economies where we estimate that between 0.5% and 2% of workers are isolating. And with timely data provided by the Cabinet Office pointing to a surge in job vacancies at the end of the year, the wave of staff absences appears to be hitting just as firms are struggling to find new staff. Temporary hits to production from staff shortages will cause GDP to only tread water this quarter.

24 January 2022

Japan Data Response

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.

24 January 2022

Japan Economics Weekly

Restrictions may not last long, key Shunto approaching

With restrictions this week expanded to cover most of Japan’s economy, and surging infections already starting to cause staff shortages in some industries, GDP is only likely to tread water this quarter. But based on experience elsewhere, the Omicron surge may only last another couple of weeks before staff shortages ease and countermeasures start to be lifted again. Meanwhile, reports suggesting that Toyota’s labour union – sometimes seen as a bellwether in wage talks – will seek a sharp rise in bonus payments at this year’s Shunto could be an early sign that wage growth will pick up this year in line with PM Kishida’s wishes.

21 January 2022

More from Marcel Thieliant

Australia & New Zealand Economics Update

Australia - Rate hikes will result in housing downturn

High household debt will magnify the impact of interest rate hikes on the housing market and we now expect prices across the eight capital cities to fall by 5% from H2 2023. The upshot is that the RBA is unlikely to hike rates as sharply as the financial markets anticipate and may end up easing policy in 2024.

24 November 2021

Japan Economics Update

Bank of Japan not losing control of money market

Media reports that suggest that the Bank of Japan is losing control of short-term interest rates due to its “Special Deposit Facility” encouraging banks to park reserves at the BoJ are wide of the mark. The scheme does not threaten the viability of the BoJ’s negative interest rate policy.

22 November 2021

Japan Economics Weekly

More cash handouts on the way

The latest survey data suggest that consumer spending is still struggling to gain momentum even as the bulk of the population are fully vaccinated and virus cases have plunged. However, with car sales now rebounding sharply as supply disruptions are easing and spending set to get another shot in the arm from the government’s cash handouts, we still expect consumption to surpass its pre-virus level by early next year.

12 November 2021
↑ Back to top