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While Japan’s economy has finally left the tax-related weakness behind, the increase in Q4 GDP fell short of expectations and supports our view that the Bank of Japan will announce more stimulus in April. … GDP (Q4 …
16th February 2015
We doubt that concerns about rising import costs caused by a renewed weakening of the yen will prevent the Bank of Japan from announcing more stimulus in April. Instead, we maintain our view that policymakers will opt for another round of pre-emptive …
13th February 2015
This report is only available as a PDF. Click to download. … Baby boomer boost unlikely to last …
While machinery orders soared in December, they were broadly flat over the last quarter, so business investment should have been little changed. Nonetheless, business surveys suggest that the recovery in capital spending should resume soon. … Machinery …
12th February 2015
The plunge in energy prices should provide a welcome fillip to economic activity, and thus strengthen price pressure in the medium term. But the more pressing concern is that lower inflation threatens to undermine the Bank’s progress in lifting …
11th February 2015
Loan growth moderated in January, and a range of leading indicators suggest that borrowing will slow further in coming months. … Monetary Indicators Monitor …
10th February 2015
The jump in the outlook component of today’s Economy Watchers Survey (EWS) suggests that economic activity is picking up speed at the start of the new year. … Economy Watchers Survey …
9th February 2015
The rise in consumer confidence for the second straight month should be followed by a further improvement as households benefit from lower energy prices. … Consumer Confidence …
The current account surplus rose to a fresh high in December, and should continue to improve in coming months as the trade balance may return to surplus. … Current Account …
Efforts to bring more women into Japan’s labour market have enjoyed success in recent years.However, it remains the case that relatively few educated women are in paid work. We estimatethat lifting the labour force participation rate of women with …
6th February 2015
The economy appears to have grown rapidly last quarter, and the labour market has not been as tight since the late 1990s. However, wage growth remains sluggish despite a temporary boost from winter bonuses, and price pressure continues to moderate. With …
5th February 2015
The Bank of Japan has turned more optimistic on the economic outlook recently, in part on the belief that the plunge in the cost of energy should boost demand. A more pressing concern though is that falling inflation is undermining expectations of future …
4th February 2015
The surge in labour cash earnings in December reflects higher winter bonuses and is unlikely to last. A strong rise in base pay in the upcoming spring wage negotiations will be needed to improve the outlook for consumer spending. … Labour Cash Earnings …
A strong rise in base pay in the spring wage negotiations (Shunto) would help convince the Bank of Japan that the current weakness in inflation will prove temporary. A tight labour market and strong corporate profits suggest that a rise in base pay of …
30th January 2015
The labour market continues to tighten, as the economic recovery is picking up speed. However, the continued slowdown in inflation suggests that the Bank of Japan still has more work to do. … Consumer Prices, Unemployment, Industrial Production & …
The drop in retail sales in December mostly reflects weaker gas prices and consumer spending likely accelerated last quarter. However, the outlook for private consumption remains mixed. … Retail Sales …
29th January 2015
The greater tolerance being shown by Japan’s government towards inflation remaining below target simply reflects the fact that the oil price collapse has made hitting the target all but impossible in the near term. However, it does reduce pressure on the …
28th January 2015
The renewed fall in small business confidence this month underlines the fragility of the economic recovery. … Small Business Confidence …
27th January 2015
The rise in Japan’s exports to the US appears to reflect the strength of the recovery there rather than yen weakness. Indeed, evidence that the plunge in the yen is boosting export volumes remains elusive. … Impact of weaker yen on export volumes remains …
26th January 2015
The trade deficit fell to the lowest level since June 2013 in December, and is set to narrow further as lower energy prices are still not fully reflected in import costs. … External trade …
The plunge in crude oil prices since last summer will reduce the cost of Japan’s energy imports by around 2.5% of GDP in the near term. However, much of the windfall will be saved and the boost to demand over the course of the year will be much smaller – …
23rd January 2015
The flash manufacturing PMI was virtually unchanged in January, and still points to a solid recovery in the sector. … Flash Manufacturing PMI …
Apart from a minor tweak to its lending programmes, the Bank of Japan left policy settings unchanged today and signalled no concern about the impact of lower oil prices. The chances of additional stimulus being announced as early as April as we currently …
21st January 2015
The first rise in consumer confidence since July should be followed by a further improvement as falling energy prices improve households’ purchasing power. … Consumer Confidence …
19th January 2015
Despite surging tax revenues, we doubt that the government will reach its target of halving the primary deficit in the coming fiscal year. However, fading fiscal drag should at least ensure that the economy returns to growth. … Fading fiscal headwind to …
16th January 2015
While bank lending expanded at a record pace last year, leading indicators still point to a slowdown in loan growth in coming months. … Monetary Indicators Monitor …
15th January 2015
The rebound in machinery orders in November was weaker than expected, and business investment may have been little changed last quarter. Rising capacity shortages, however, suggest that corporate capital spending will soon start to recover. … Machinery …
The collapse in oil prices will force the Bank of Japan to tear up its inflation forecasts at the Policy Board meeting next week. It is also likely to set back efforts to lift inflation expectations and so, before too long, is likely to contribute to a …
14th January 2015
The strong rebound in the Economy Watchers Survey (EWS) in December stands in stark contrast with other business surveys which mostly weakened last month. … Economy Watchers Survey …
13th January 2015
The drop in the current account surplus in November was much smaller than expected, and should be followed by a renewed increase in coming months. … Current Account …
The unemployment rate has fallen below the level consistent with stable price pressure in recent months. It is unlikely to fall much further, as the pool of attractive job candidates is drying up. With the working age population in decline, the labour …
9th January 2015
The number of tourists visiting Japan reached a record high last year, and so did their aggregatespending. However, the volume of tourism expenditure remains small, and spillover effects from risingemployment or capital spending have proved elusive. … …
7th January 2015
Recent data suggest that the economy has finally shed the manacles of the sales tax hike. However, demographic headwinds are building, and real wages continue to fall despite the recent slowdown in inflation. We therefore still think that growth will be …
The recently-announced supplementary budget is small by past standards and does not significantlyalter the economic outlook. While the budget for the coming fiscal year foresees a fresh record high inpublic spending, it also factors in a surge in tax …
6th January 2015
Firms were predicting strong gains in industrial output around the turn of the year despite some weakness in the latest figures on spending and production. But with the labour force now shrinking and wage growth still subdued, we think that GDP growth …
5th January 2015
The decline in small business confidence to a seven-month low in December underlines that economic momentum in Japan remains sluggish. … Small Business Confidence …
24th December 2014
While the Bank of Japan left policy settings unchanged at today’s meeting, the recent plunge in the cost of energy will result in a further slowdown in price pressure and jeopardise the Bank’s efforts to lift inflation expectations. The upshot is that …
19th December 2014
Wage growth is set to remain sluggish next year and, with households also likely to be trying to rebuild their savings, we expect consumer spending to be subdued. In turn, this suggests that GDP growth in 2015 will be much weaker than many expect. Weak …
Bank lending is growing at the fastest pace in years, but a range of leading indicators point to a slowdown in coming months. … Monetary Indicators Monitor …
18th December 2014
The drop in the trade shortfall in November should be followed by a further narrowing in coming months as lower oil prices will reduce the import bill. … External trade …
17th December 2014
Policymakers will have been comforted by the jump in the Nikkei and the plunge in the yen since they stepped up the pace of monetary easing at the end of October. As such, they will almost certainly leave policy settings unchanged this week. However, the …
16th December 2014
The flash manufacturing PMI was broadly unchanged in December and suggests that the sector remains in recovery mode. … Flash Manufacturing PMI …
If the right policies were followed, we estimate that Japan’s potential growth rate could rise by around one percentage point. Measures to slow the shrinkage of the labour force and to reduce the regulatory burden are most pressing. Unfortunately, we fear …
15th December 2014
Today’s Tankan survey suggests that Japan’s economy stabilised in the fourth quarter, but a rapid recovery is not on the cards. … Tankan …
The decline in machinery orders in October follows four increases in a row and is therefore not necessarily a disaster. We think that business investment will start to rebound soon. … Machinery Orders …
11th December 2014
The renewed fall in consumer confidence last month shows that Abenomics provides little reason to cheer for Japan’s households. … Consumer Confidence …
10th December 2014
The deterioration in business conditions in today’s Business Outlook Survey is largely the result of seasonal patterns. In fact, the survey suggests that the economic recovery remains intact. … Business Outlook Survey …
The plunge in today’s Economy Watchers Survey suggests that Japan’s consumers remain in dire straits as the labour market seems to have softened. … Economy Watchers Survey …
8th December 2014
The second estimate of Q3 GDP showed that the economy shrank at an even faster pace than initially estimated. However, a return to growth in Q4 looks likely. … GDP (Q3 revised) & Current Account …
In terms of the boost to corporate and household spending power, Japan should be among the big winners from the fall in global energy prices. However, for policymakers, the resulting drag on inflation is likely to be a bigger concern. We expect consumer …
5th December 2014
