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Consumer confidence rebounded in July and suggests that private consumption will continue to recover. … Consumer Confidence (Jul.) …
2nd August 2017
Industrial production rose by nearly 2% last quarter which suggests that GDP growth accelerated. The outlook for the third quarter is positive. … Industrial Production …
31st July 2017
Abenomics appeared to run out of momentum well before a recent slump in Prime Minister Abe’s popularity put his political future in doubt. In particular, his departure would matter little for structural reform. Monetary policy should also continue along a …
28th July 2017
The rebound in retail sales and “core” household spending in June suggests that consumer spending rose at a solid pace last quarter. Meanwhile, inflation remains very low despite the continued tightening of the labour market. … Consumer Spending, Labour …
Small business confidence was little changed in July and still points to solid gains in industrial production. But even though firms continue to report severe staff shortages, the survey suggests that price pressures remain contained. … Small Business …
26th July 2017
We’re not much convinced by suggestions from the Bank of Japan that firms cutting back on the hours their employees work has contributed to the continued lack of inflation pressure. Very low and entrenched inflation expectations are a better explanation. …
25th July 2017
The second consecutive drop in the output index of the manufacturing PMI suggests that the sector is slowing. But the survey still points to faster increases in consumer prices. … Flash Manufacturing PMI …
24th July 2017
A year has passed since Japan’s government announced a huge fiscal stimulus. We argued at the time that the announcement would be followed by only a negligible increase in public spending. In fact, spending has fallen slightly since the announcement. Now …
21st July 2017
The Bank of Japan upgraded its assessment of the economy yet again at today’s meeting. But the Board’s inflation forecasts remain far too optimistic even after renewed downgrades. We reiterate our longstanding view that the Bank will not tighten policy …
20th July 2017
Export volumes probably fell slightly in Q2 while import volumes rose sharply so net trade turned into a drag on GDP growth. However, strong gains in industrial production still point to another solid rise in output. … External trade …
The popularity of the government has suffered severely recently and there is now a real chance that Mr Abe will be out of office before the next legislative elections. A change of prime minister could affect decisions over who should lead the Bank of …
19th July 2017
While inflation remains well below the Bank of Japan’s 2% target, Governor Kuroda deserves credit for a number of radical policy changes. His reappointment would therefore underline the government’s resolve in tackling deflation and repairing the public …
18th July 2017
The Bank of Japan will probably upgrade its assessment of the health of the economy at the upcoming meeting. But downward revisions to the Board’s inflation forecasts will underline that policy tightening remains a distant prospect. … Lower inflation …
17th July 2017
Japan is less welcoming to foreign direct investment than many other rich economies. But cuts to corporate tax rates, the prospect of additional free trade agreements and high profitability are making it more attractive. The recent pick-up in inward …
14th July 2017
Private sector debt is growing at the fastest pace on record as corporate debt issuance has surged. As a result, both household and corporate debt are now rising again relative to output. … Monetary Indicators Monitor …
US 10-year government bond yields have climbed to a two-month high in recent days and we expect them to rise further in coming months. By contrast, the Bank of Japan has underlined its determination to prevent 10-year JGB yields from rising much above …
11th July 2017
The Economy Watchers Survey continued to improve in June and points to strong gains in consumer spending. … Economy Watchers Survey …
10th July 2017
Machinery orders fell to a one-year low in May. But with capacity shortages intensifying and capital goods shipments rebounding, business investment should continue to expand. … Machinery Orders …
We now expect the government to delay the sales tax hike currently scheduled for October 2019 beyond 2020. While this would remove one obstacle to policy tightening by the Bank of Japan, the bigger picture is that price pressures will strengthen only …
7th July 2017
The acceleration in base pay in May largely reflects a rebound in working hours. While strong growth in part-time pay points to faster overall gains, there is still a long way to go before wage growth is strong enough to generate 2% inflation. … Labour …
The impact of the proposed tariff cuts in the EU/Japan free trade agreement should not be overstated. But the deal will also reduce non-tariff barriers and barriers to foreign direct investment which are key to enhance competition and boost Japan’s …
6th July 2017
While the ruling LDP’s severe defeat in local elections in Tokyo is not necessarily a bellwether to developments at the national level, we think that the government may respond with a larger supplementary budget for this year. What’s more, it now seems …
3rd July 2017
Despite a decline in June, consumer sentiment remains at elevated levels and household inflation expectations continue to recover. … Consumer Confidence …
The jump in the Tankan’s headline index for large manufacturers suggests that economic activity accelerated last quarter. Capacity shortages have intensified and manufacturers are reporting the smallest declines in output prices since 2008. … Tankan …
The ratio of public debt to GDP in Japan is more likely to rise than fall over the coming decade. But the situation is not as precarious as it may seem, given the government’s large holdings of financial assets and, in particular, the fact that the Bank …
30th June 2017
Today’s activity data suggest that industrial production expanded at a decent pace in the second quarter. However, consumer spending appears to have eased a touch last month, while price pressures remain subdued. … Ind. Prod., H’H Spending, Unempl. & …
We wouldn’t read too much into the fall in retail sales in May as sales remain stronger than they were throughout most of 2016 and the early part of this year. We’ve pencilled in another rise in private consumption this quarter. … Retail Sales …
29th June 2017
Small business confidence rose in June and suggests industrial production will continue to record modest gains. While firms reported severe staff shortages, price pressures remain subdued. … Small Business Confidence …
28th June 2017
Better education, an ageing workforce and easier job searching via the internet have reduced Japan’s structural jobless rate and kept a lid on wage growth in recent years. Even so, employers report severe staff shortages and the ratio of vacancies to …
23rd June 2017
Even though the manufacturing PMI fell rather sharply in June, it still points to a robust expansion in industrial output. What’s more, today’s survey suggests that price pressures continue to strengthen. … Flash Manufacturing PMI …
Export values didn’t rebound in May while import values edged higher which suggests that net exports turned into a drag on GDP growth in Q2. However, business surveys suggest that external demand remains healthy and we still expect net trade to provide …
19th June 2017
Recent gains in the hourly wages of part-time workers are an early indication that the tight labour market is finally creating some upward pressure on wages. That would be a welcome development for the Bank of Japan but far faster wage increases than seem …
16th June 2017
The Bank of Japan today turned more upbeat in its assessment of economic conditions, but Governor Kuroda remained cautious on the prospect of hitting the inflation target. With inflation set to undershoot the Bank’s projections by a wide margin, the …
Bank profits have continued to shrink as lenders’ net interest margins have declined. However, non-financial firms are benefitting from rock-bottom borrowing costs and corporate bankruptcies remain very low. … Monetary Indicators Monitor …
14th June 2017
The recovery in Japan’s economy since early last year has mostly been driven by a surge in exports, but Japanese consumers also seem to be joining the party. Consumer spending is on track for another strong increase this quarter, with spending on services …
13th June 2017
We wouldn’t read too much into the fall in machinery orders in April as the figures have not been a good guide to business investment recently. In fact, the rebound in capital goods shipments suggests that capital spending will continue to recover. … …
12th June 2017
The Bank of Japan’s JGB purchases of ¥4.3 trillion in May were the lowest since it stepped up purchases in October 2014. If overseas yields rebound in coming months as we expect, we will probably see a couple of months with larger purchases. But the …
9th June 2017
Today’s Economy Watchers Survey suggests that consumer spending will accelerate in coming months. By contrast, the survey points to broadly stagnant industrial output and a slowdown in job growth. … Economy Watchers Survey …
8th June 2017
The Bank of Japan will almost certainly leave policy settings unchanged at the upcoming meeting. And with inflation set to fall short of its forecasts for the current fiscal year, there is little chance of policy tightening anytime soon. … Board will have …
Revised data show that GDP growth was weaker last quarter than initially reported. However, the early indications for the current quarter are positive and we reiterate our 2017 GDP forecast of +1.5%. … GDP (Q1 Revised) & Current Account …
We expect the expansion in the labour force to slow in coming years which suggests that wage growth should soon start picking up again. However, the shift to flexible employment forms, globalisation and technological progress all have undermined the …
6th June 2017
Following an unusually weak reading in March, the rebound in wage growth in April came as no surprise. But the bigger picture is that labour cash earnings are not growing fast enough to create noticeable cost pressures. … Labour Cash Earnings …
Growth in labour income slowed sharply in Q1 but a rebound seems likely. Even if income growth remains sluggish, households have plenty of scope to reduce savings following a prolonged period of restraint after 2014’s sales tax hike. And with inflation …
2nd June 2017
Consumer sentiment rebounded in May and remains near the highest it has been since the sales tax hike. Meanwhile, household inflation expectations have started to recover again. … Consumer Confidence …
Today’s capital spending figures suggest that business investment was fractionally stronger last quarter than initially reported. However, we expect next week’s revised GDP figures to confirm the preliminary estimate of a 0.5% q/q increase in Q1. … …
1st June 2017
Small business confidence was little changed in May and points to continued gains in industrial output. But despite rising labour shortages, price pressures remain subdued. … Small Business Confidence …
31st May 2017
We expect energy inflation to peak next quarter and then drop back, providing another challenge to the Bank of Japan’s efforts to reach a 2% inflation target. … When will energy inflation …
Even though firms are projecting a renewed fall in May and June, the jump in industrial production in April bodes well for GDP growth in the second quarter. … Industrial Production …
Strong gains in retail sales and “core” household spending in April suggest that private consumption is on track for another solid increase in the second quarter. Meanwhile, employment growth remains very strong and the labour market is the tightest it …
30th May 2017
Strong growth in Japan’s main export markets has provided a fillip to export volumes in recent quarters. However, foreign demand growth is likely to fade in coming months and the unusual recent weakness in import volumes should also have run its course. …
26th May 2017
