Immigration to Japan is starting to make a meaningful difference in its labour market: the number of foreign workers rose by nearly 20% last year. With Japanese people more accepting of immigration than generally thought and the government taking steps to ease restrictions, this trend is likely to continue, with implications for employment, output and inflation. In the coming week’s releases, the annual growth rates of both import and export values should have turned positive in January for the first time in months, and we expect the seasonally-adjusted trade surplus to have climbed to a fresh high. However, we’ve pencilled in a small drop in the manufacturing PMI as the renewed strengthening of the exchange rate in recent weeks weighed on sentiment.
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