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Low interest rates and debt-to-income ratios suggest that Japan’s households and firms can continue to borrow as strongly as they have in recent months. … Monetary Indicators Monitor …
17th September 2015
Today’s trade data suggest that net trade remained a drag on GDP growth in Q3. … External trade (Aug.) …
While the Bank of Japan stuck to its course today, as expected, lacklustre economic growth, a marked lack of wage pressure and falling inflation expectations are likely to force the Board to announce more easing next month. … Case for more BoJ stimulus …
15th September 2015
With poorly paid non-regular jobs accounting for the bulk of new job creation and the tight labour market not providing the hoped-for boost to wages, we think that the near-term outlook for consumer spending remains poor. A marked acceleration in private …
11th September 2015
Economic activity continues to languish, and the tight labour market has failed to generate broad-based wage gains. With renewed falls in crude oil prices undermining the Bank’s attempts to lift inflation expectations, we expect policymakers to step up …
10th September 2015
The renewed decline in machinery orders in July suggests that business investment may fall yet again this quarter. … Machinery Orders …
While consumer confidence recovered in August, the moderation in households’ price expectations provides another reason for the Bank of Japan to step up the pace of easing. … Consumer Confidence …
9th September 2015
Today’s Economy Watchers Survey (EWS) suggests that the economy is still struggling to recover from Q2’s slump. … Economy Watchers Survey …
8th September 2015
While the economy shrank by slightly less last quarter than initially estimated, the first data for Q3 suggest that a rapid recovery in the second half of the year is not on the cards. … GDP (Q2 Revised) & Current Account …
With falls in headline inflation raising questions about its policy approach, the Bank of Japan has recently been highlighting alternative price gauges that show inflation to be rising. These alternatives are timely, but narrow and skewed towards food …
4th September 2015
The Bank of Japan’s efforts to lift inflation to 2% continue to face a number of headwinds. Spare capacity widened last quarter as output dropped, oil prices have fallen to fresh lows, and market inflation expectations have moderated. While the Bank had …
The rebound in bonus payments in July was far too modest to prevent a drop in this year’s summer bonuses. With the tight labour market failing to create strong wage gains, the Bank of Japan still has more work to do. … Labour Cash Earnings …
The impact of the gradual resumption of nuclear energy generation on Japan’s trade balance will be negligible. Nor should we expect a major fall in electricity prices. … Nuclear restart not a game …
2nd September 2015
The Ministry of Finance’s survey on corporate finances suggests that the economy shrank by even more last quarter than initially estimated. … Capital Expenditure …
1st September 2015
The drop in industrial production in July suggests that economic activity will recover only slowly this quarter. … Industrial Production …
31st August 2015
The recent equity market sell-off in Japan, which originated in China, does not reflect a major deterioration in the economic outlook for Japan. In fact, there are signs that Chinese demand for Japanese goods is recovering. But the stronger yen and lower …
28th August 2015
Underlying price pressures are not quite as weak as the stagnation in the ”core” CPI suggests. But following a renewed widening in spare capacity last quarter, the chances of hitting the Bank of Japan’s 2% inflation target anytime soon remain slim. … …
Small business confidence moderated in August, but still points to modest gains in industrial output. … Small Business Confidence …
26th August 2015
Banks report sluggish loan demand, but lenders have underestimated the strength ofcredit growth since last year’s sales tax hike. We think that borrowing by householdsand firms will continue to increase at a strong pace in coming months. … Monetary …
25th August 2015
Further falls in crude oil prices are making it even harder for the Bank of Japan to hit its inflation target. Despite some sanguine comments from Prime Minister Abe today, we think these price falls will compel the Bank of Japan to step up the pace of …
24th August 2015
The Government Pension Investment Fund achieved a record profit last year, and the value of its assets climbed to a fresh high. However, the fund won’t earn double-digit returns on a sustained basis. Further tax hikes or higher social security …
21st August 2015
Today’s flash manufacturing PMI for August suggested that the sector has continued to gain momentum, adding to signs that the economy has returned to growth this quarter, following a contraction in Q2. … Flash Manufacturing PMI …
The trade deficit widened in July, and should continue to rise in coming months as the weaker yen pushes up import costs. … External trade …
19th August 2015
The slump in output last quarter should be followed by a tepid recovery in the second half of the year. We remain convinced that the Bank of Japan will announce more easing in October. … GDP (Q2 …
17th August 2015
The Bank of Japan will soon become the largest holder of Japanese government bonds. Since the income it earns on those securities is mostly transferred back to the government, the Bank’s JGB purchases substantially reduce the public interest bill. In …
14th August 2015
Despite a marked decline in June, machinery orders continued to recover last quarter, consistent with another rise in non-residential investment. … Machinery Orders …
13th August 2015
Prime Minister Abe returned to power in late 2012 with the intention to lift average real GDP growth to 2% by implementing policies at “unprecedented speed”. Despite some success incertain areas, overall progress has been disappointing, and the third …
7th August 2015
While the Bank of Japan today decided to stick to its guns, the recent sharp slowdown in economic activity and the prospect of a prolonged period of near-zero inflation should soon convince policymakers that more easing is needed. We maintain our view …
There are tentative signs that underlying price pressures have strengthened again since the start of the year. However, GDP almost certainly shrank in Q2, and a rapid rebound in the second half of the year is not on the cards. The chances of hitting the …
5th August 2015
The economy almost certainly contracted last quarter, rendering the Bank’s upbeat GDP forecasts increasingly unrealistic and denting hopes that inflation will reach 2% by next summer. Rather than merely expanding the timeframe for hitting the 2% target …
4th August 2015
Labour cash earnings fell the most since the 2009 recession during the first month of the summer bonus season, highlighting that the tight labour market has not created stronger wage pressures. … Labour Cash Earnings …
The June activity and spending data cemented our view that Japan’s economy shrank last quarter.While business surveys point to a rebound in Q3, growth will likely remain too slow to create strong price pressures. We stick to our forecast that the Bank of …
31st July 2015
Today's data provide some tentative signs that underlying price pressure has started to strengthen again. But with consumer spending falling to the lowest level since last year’s sales tax hike, we see little chances that the 2% inflation target will be …
Other things being equal, population ageing should boost price pressures. But that hasn’t happened in Japan because there has been an offsetting increase in the share of adults willing to work. Instead, perhaps the key channel through which population …
30th July 2015
The rebound in industrial output in June was not strong enough to prevent a contraction in Q2, and we stick to our view that the economy shrank last quarter. … Industrial Production …
The jump in small business confidence in July suggests that the economy should recover in the third quarter after Q2’s slump. … Small Business Confidence …
29th July 2015
The renewed drop in retail sales in June adds to the evidence that consumer spending fell last quarter. … Retail Sales (Jun.) …
We expect the ratio of net government debt to GDP to remain broadly unchanged in coming years, as a weaker yen and a buoyant stock market should lift the value of public assets by enough to offset higher gross debt levels. However, inflation will have to …
24th July 2015
Today’s flash manufacturing PMI suggests that the sector returned to growth in the third quarter following a likely drop in output in Q2. … Flash Manufacturing PMI …
The Bank of Japan has started to publish a wider set of inflation measures in its monthly report. With all of them showing inflation well below the 2% target, we think suggestions that this shift makes further policy easing less likely are wide of the …
23rd July 2015
While today’s data showed a rebound in export values in June, we think that net trade remained a drag on GDP growth last quarter. … External trade …
We expect Japan’s GDP growth rate to average under 1% over coming years, too slow for the Bank of Japan to take its foot off the monetary pedal any time soon. For financial markets, this is likely to translate into further yen weakness and equity gains. … …
17th July 2015
Despite some small adjustments, the Bank of Japan’s interim forecasts today reveal that policymakers remain upbeat about the outlook. But weak economic activity and the prospect of a prolonged period of below-target inflation should soon convince …
15th July 2015
The slowdown in economic activity in Q2 has dented hopes of an imminent strengthening of price pressure. The Bank could simply push the timeframe for hitting its 2% inflation target back yet again, but this would risk undermining the credibility of QQE. …
13th July 2015
Almost three years after the yen started its steep fall, there is still little evidence of any boost to export volumes. Instead, a weaker exchange rate has mostly improved the non-energy trade balance by restraining import demand. … Weaker yen starts to …
10th July 2015
Credit growth remains strong by past standards, and there are some signs that households’ appetite for borrowing has strengthened. We therefore think that household and corporate debt will continue to expand at a solid pace. … Monetary Indicators Monitor …
9th July 2015
Machinery orders climbed to a seven-year high in May and suggest that business investment continued to expand last quarter. … Machinery Orders …
Today’s Economy Watchers Survey (EWS) suggests that industrial output is no longer falling, but a rapid rebound is not on the cards either. … Economy Watchers Survey …
8th July 2015
The current account surplus jumped in May, but we think it will fall again in coming months. … Current Account (May) …
With trade and direct financial ties between Japan and Europe relatively weak, the main channel through which Greek exit from the euro-zone could affect Japan is a pick-up in safe haven flows. If that happened, it could trigger renewed strengthening of …
3rd July 2015
