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The Bank of Japan’s offer to buy an unlimited amount of bonds today for the first time since July has dampened expectations that policymakers are about to withdraw stimulus. As a result, the yen has now started to weaken again. We expect it to fall …
2nd February 2018
With our GDP tracker suggesting that activity continued to expand at a rapid clip last quarter, risks to our forecast of a 1.2% rise in GDP this year are skewed to the upside. However, the economy is now running into capacity constraints and we still …
Household sentiment remained strong at the start of 2018 and suggests that the expansion in consumer spending has further to run. … Consumer Confidence …
31st January 2018
Industrial production recorded another marked rise last quarter which suggests that GDP growth remained strong. However, the outlook for the coming months is less rosy. … Industrial Production …
While the jobless rate edged up in December, the continued rise in job vacancies suggest it will fall to fresh lows before long. Meanwhile, consumer spending should have rebounded last quarter even though the December data on retail sales and household …
30th January 2018
One widely-overlooked factor driving Japan’s growth in recent years has been a surge in the number of foreign workers. This appears to be continuing, as employers face labour shortages and recent legal changes have made it easier for foreigners to work in …
29th January 2018
Some commentators have been arguing that the Bank of Japan should be raising interest rates now to support household incomes. However, it isn’t clear whether this would boost household spending, while higher interest rates certainly would present a …
26th January 2018
Inflation excluding fresh food remained close to 1% in December. But with wage growth still sluggish and the tailwind from higher energy prices set to fade, inflation won’t rise any further. … Consumer Prices …
The manufacturing PMI climbed to a four-year high in January and suggests that the economic expansion remained vigorous at the start of this year. … Flash Manufacturing PMI …
24th January 2018
While import volumes outpaced export volumes in December, we still think that net exports supported GDP growth last quarter. … External Trade …
For the first time since July 2014, the Bank of Japan didn’t lower its inflation forecasts any further. However, we believe that the Bank is too optimistic about the inflation outlook and we remain convinced that policy won’t be tightened anytime soon. … …
23rd January 2018
We expect the price of Brent crude oil to moderate from $70 per barrel to $55 by the end of 2018. But even if global oil prices remain close to current levels, inflation in Japan would only average 1% this year instead of our existing forecast of 0.7%. …
19th January 2018
Speculation that the Bank of Japan is about to increase its yield target has pushed the yen higher. However, we think that policy tightening remains a distant prospect and that the yen will weaken as this become clear. … Bank of Japan to keep policy loose …
18th January 2018
Inflation climbed to a fresh high in November and mounting capacity shortages suggest that price pressures will strengthen further. However, most of the recent increase has been driven by higher energy inflation. We expect crude oil prices to fall this …
17th January 2018
Machinery orders were the highest in almost a decade in November which suggests that the expansion in business investment continued last quarter. … Machinery Orders …
Bank lending has continued to slow. However, this doesn’t seem to reflect a tightening in bank lending attitudes, which remain very accommodative. What’s more, overall borrowing by the private sector is growing at the fastest pace since the early 1990s as …
15th January 2018
A reduction in the size of the BoJ’s JGB auction moved markets this week. This wasn’t policy tapering in an effort to reduce stimulus: the Bank now only buys what is needed to maintain the yield target and that amount has been falling for a while. Indeed, …
12th January 2018
The Economy Watchers Survey remained strong in December despite a small decline. The survey suggests that consumer spending and employment will continue growing at rates comparable to those seen over the past few months, while the manufacturing sector …
This week’s reduction in the Bank of Japan’s scheduled government bond purchases doesn’t signal that it is about to lift the yield target. The Bank purchases whatever is needed to maintain the target and the credibility of its commitment to the target has …
10th January 2018
Households remained in high spirits in December which suggests that Q3’s drop in consumer spending wasn’t repeated last quarter. … Consumer Confidence …
9th January 2018
Regular earnings probably rose at the fastest pace in two decades last year. Yet the pace of improvement remains woefully slow so the Bank of Japan’s 2% inflation target remains out of reach. … Labour Cash Earnings …
Perhaps the most remarkable achievement of Abenomics has been the continued increase in employment despite the contraction in the working age population. It is possible that Japan will be able to continue dodging its apparent demographic destiny but this …
8th January 2018
While the budget for the coming fiscal year foresees record spending, expenditure will only rise marginally and revenues may climb even faster. The upshot is that the government is set to proceed with fiscal tightening. While there is no pressing need to …
5th January 2018
Japan’s November activity data suggest that the economy recorded an eighth consecutive quarter ofgrowth in Q4. And with the labour market the tightest in at least two decades, underlying inflationcontinues to accelerate. … Price pressures strengthening …
2nd January 2018
Unless private sector surpluses fall, the planned increase in the sales tax in 2019 will result in weaker domestic demand. Incentives to increase investment spending or lift dividend payments would lower the corporate surplus. But Japanese firms already …
21st December 2017
A rising number of analysts believe that the BoJ will start tightening policy by the end of next year. But with inflation set to remain below its 2% target, we think that the Bank will keep policy loose for longer. … Weak price pressures will prevent BoJ …
The Bank of Japan has been warning that low policy rates could eventually prove contractionary if they depress banks’ profits and capital and reduce their willingness to lend. In reality though, capital ratios have risen in recent years, banks’ lending …
19th December 2017
Producer prices in Japan are rising at the fastest pace in years but we still expect consumer price inflation to remain broadly flat in coming months. … What to make of the surge in producer …
18th December 2017
Japan’s economy will expand the most this year since 2013. Yet the unemployment rate hasn’t fallen any further since the start of the year. This isn’t due to a surge in productivity that has reduced labour demand. In fact, productivity growth has been …
Export volumes continued to grow faster than import volumes last month which suggests that net trade continued to support growth in the current quarter. … External Trade …
We expect Japan’s GDP growth to slow next year as the economy is now operating above capacity. Price and wage pressures should strengthen somewhat but inflation will remain well below the Bank of Japan’s 2% target and monetary policy settings will …
15th December 2017
Today’s Tankan survey showed that business conditions didn’t improve much further this quarter which suggests that growth is now slowing. Nonetheless, capacity and staff shortages continue to intensify and price pressures are strengthening. … Tankan …
The manufacturing PMI was the highest in nearly four years in December as external demand continues to improve. However, price pressures are only strengthening slowly. … Flash Manufacturing PMI …
14th December 2017
With yields set to rise overseas and concerns that low policy rates may curtail lending likely to linger, speculation about policy tightening in Japan will not subside next year. However, we believe that subdued price pressures will force the Bank to keep …
13th December 2017
The rebound in machinery orders left them no higher than their Q3 average, but we’ve still pencilled in another rise in business investment this quarter. … Machinery Orders …
The jobless rate has been effectively flat since February despite continued strong growth in the economy. The economy is now close to full employment which suggests that wage growth will continue to strengthen. However, wages would have to rise much …
8th December 2017
The surge in the Economy Watchers Survey is yet another sign that the drop in consumer spending last quarter was just a blip. The survey suggests that job growth will pick up further and that industrial production will rise at a strong pace over the …
Regular earnings are now growing a touch faster than productivity which suggests that firms may have to start raising prices before long. Nonetheless, there is still a long way to reach the Bank of Japan’s 2% inflation target. … Labour Cash Earnings …
Revised data show that growth was stronger last quarter than initially estimated. However, the economy is running into capacity constraints and firms face increasingly severe staff shortages. The upshot is that the expansion should slow again before long. …
A long period of sustained economic growth has helped drive unemployment in Japan to its lowest level in nearly a quarter of a century. Nonetheless, inflation and wage growth are both barely positive and look set to remain subdued. The Bank of Japan is …
7th December 2017
Households are the most upbeat since 2013 which suggests that the drop in consumer spending last quarter was just a blip. … Consumer Confidence …
4th December 2017
Governor Kuroda has recently discussed the idea that extremely low interest rates could undermine bank profits and capital and, ultimately, lending. Evidence for this idea is lacking in Japan, where the main pressure on bank profits is coming from …
1st December 2017
Today’s household spending data suggest that private consumption remained sluggish this quarter. Meanwhile, there are still few signs that the tight labour market is boosting price pressures. … Labour Market, Household Spending, Consumer Prices (Oct.) & …
Even though industrial production disappointed in October, optimistic forecasts for the remainder of Q4 suggest that activity accelerated towards the end of the year. … Industrial Production …
30th November 2017
While retail sales stagnated in October, strong gains in household incomes and buoyant consumer confidence suggest that consumer spending should return to growth this quarter. … Retail Sales …
29th November 2017
Recent comments by BoJ Board members have trigged speculation that the Bank is considering a gradual withdrawal of monetary stimulus, in part to help Japan’s banks. But with inflation still rooted well below the 2% target, we still expect the Bank to hold …
27th November 2017
Private consumption fell last quarter for the first time since end-2015. However, solid growth in household incomes, an elevated household saving rate and upbeat consumer confidence suggest that this was just a blip. We reiterate our forecast that private …
24th November 2017
The manufacturing PMI climbed to a fresh high in November and suggests that the expansion accelerated in the final quarter of the year. What’s more, the survey shows that price pressures continue to strengthen. … Flash Manufacturing PMI …
Export volumes continue to rise more rapidly than import volumes so net trade should have continued to support GDP growth in the current quarter. … External Trade …
20th November 2017
Some commentators are arguing that the costs of continued loose monetary policy outweigh the benefits as house and stock prices have soared and banks’ lending margins have slumped. By contrast, we believe that these development should not be major causes …
17th November 2017
