Japan Machinery Orders (Jul. 2021)

The rise in machinery orders in July and optimistic projections for August and September support our view that business investment will rise strongly again across Q3. And private investment should continue to rebound in Q4 and into next year as vaccines allow domestic restrictions to be lifted.
Tom Learmouth Japan Economist
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Japan Economics Weekly

Carmakers will struggle even after shortages abate

The disruptions to supply chains from Delta outbreaks across Southeast Asia that resulted in another big drop in car exports in September will ease soon. However, carmakers are responding with lower capital spending and are lagging their US and European counterparts in electric vehicle sales. The upshot is that the sector won’t return to former glory.

22 October 2021

Japan Data Response

Japan Consumer Prices (Sep. 2021)

Headline inflation in September turned positive for the first time this year due to spikes in fresh food and energy inflation. As the drag from mobile phone tariffs fades in the first half of next year, underlying inflation will turn positive. However, we think it will struggle to break past 1%.

22 October 2021

Bank of Japan Watch

Bank to look through weaker yen and supply shortages

Sitting comfortably with continuity candidate PM Kishida in charge, the Bank of Japan won’t alter its major policy settings at its October meeting. And we doubt the Bank will respond with policy tweaks to the recent weakening in the yen, nor to continued supply chain disruptions.

21 October 2021

More from Tom Learmouth

Japan Economics Update

Ishiba could clear path for Kono to become PM

Kono Taro is emerging as the favourite to succeed Mr Suga as PM. While Kishida and Takaichi are viewed as safer hands by LDP party elders, the outspoken Kono’s popularity with the public gives him the edge on the eve of a general election where the ruling coalition fears losing seats. And if rumours that Ishiba Shigeru will not stand and instead back Mr Kono turn out to be true, then that would leave neoliberal reformer Kono as the clear frontrunner. While we expect a relatively large supplementary budget to be compiled in October regardless of who wins, each of the four main contenders are likely to take differing approaches to structural reform.

8 September 2021

Japan Data Response

Japan Wages & Household Spending (Jul. 2021)

Wage growth recovered in July and it should strengthen further over the coming months as the labour market tightens and vaccines fuel a further recovery in overtime pay. Meanwhile, the drop in household spending in July supports our view that consumer spending will fall across Q3.

7 September 2021

Japan Data Response

Labour Market & Industrial Production (Jul. 2021)

While the Delta wave may reverse some of July’s jump in employment, we think vaccines will allow employment to surpass its pre-virus level by the end of this year. Meanwhile, the fall in industrial production in July suggests that supply shortages remain a constraint for firms in certain sectors, though manufacturing output is still on course to rise across Q3.

31 August 2021
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