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This page has been updated with additional analysis since first publication. Underlying inflation set to decline further While the jump in inflation in Tokyo to a seven-month high wasn’t nearly as bad as it looks, it is consistent with our view that …
26th October 2023
This page has been updated with additional analysis since first publication. Inflation will only fall below 2% by end-2024 While inflation weakened in September, we think inflation will only fall below the BoJ’s 2% target by the end of next year. The …
20th October 2023
Drag from net trade unlikely to persist Net trade probably was a large drag on GDP growth in Q3, but we suspect it will become less of a drag this quarter. The 4.3% annual rise in export values in September was stronger than the analyst consensus of 3.1% …
19th October 2023
This page has been updated with additional analysis since first publication. Non-residential investment probably declined in Q3 Machinery orders are on track for a fall across the third quarter, consistent with our forecast of a decline in business …
12th October 2023
This page has been updated with additional analysis since first publication. Regular wage growth set to remain strong Regular earnings growth remained strong in August and with the labour market set to tighten, it could yet accelerate further. Growth in …
6th October 2023
This page has been updated with additional analysis since first publication . Japan’s Ministry of Finance may have intervened in support of the yen today after the USD/JPY rate rose through the symbolic 150 level in the wake of the upside surprise in US …
3rd October 2023
This page has been updated with additional analysis since first publication. Price pressures remain strong as economy is running hot The stronger-than-expected improvement in the latest Tankan survey suggests that the economy will continue to expand at …
2nd October 2023
This page has been updated with additional analysis since first publication. Labour market set to tighten as GDP growth holding up While retail sales and industrial production were little changed in August, they point to another decent rise in GDP across …
29th September 2023
This page has been updated with additional analysis since first publication. Inflation will only fall below 2% by end-2024 While the Tokyo CPI suggests that underlying inflation has now peaked it will take until late next year for inflation to fall below …
Negative rates will end in early-2024 The Bank of Japan didn’t provide any hints that it will abandon loose monetary policy anytime soon when it kept policy settings unchanged today, but Governor Ueda may do so later today. We think the Bank will lift its …
22nd September 2023
This page has been updated with additional analysis since first publication. Inflation on its way down but price pressures remain Headline inflation fell slightly in August. This was driven by a slowdown in fresh food inflation as well as a further …
This page has been updated with additional analysis since first publication. Q3 GDP growth to slow sharply Net exports probably won’t support GDP growth in the third quarter, but export volumes should continue to rise over coming quarters. The 0.8% …
20th September 2023
This page has been updated with additional analysis since first publication. Business investment should still rebound in Q3 “Core” machinery orders fell by 1.1% m/m in July, and the data point to a sizeable fall in spending on machinery and transport …
14th September 2023
This page has been updated with additional analysis since first publication. Wage growth should moderate as inflation cools While the sharp slowdown in wage growth in July wasn’t as bad as it looks, it suggests that above-target inflation won’t prompt …
8th September 2023
Note: We’ll be discussing the China growth/stimulus question, the BOJ’s policy outlook, Indian food price inflation and more in our monthly Asia Drop-In on Thursday, 31 st August . Register here to join the online briefing. This page has been updated with …
31st August 2023
29th August 2023
This page has been updated with additional analysis since first publication. Underlying inflation losing momentum While underlying inflation remained at a 40-year high in the August Tokyo CPI, the momentum of price increases has slowed markedly which …
25th August 2023
This page has been updated with additional analysis since first publication. PMIs point to continued strength in economic activity The composite PMI remained high in August which points to continued strength in GDP growth, but a slowdown from the bumper …
23rd August 2023
This page has been updated with additional analysis since first publication. Underlying inflation will peak soon Headline inflation was unchanged in July as falling energy prices offset a further pick-up in underlying inflation. While we expect goods …
18th August 2023
This page has been updated with additional analysis since first publication . Net trade boost reversing in Q3 The July trade data suggest that the huge boost from net exports in Q2 will unwind this quarter, which will result in a sharp slowdown in GDP …
17th August 2023
This page has been updated with additional analysis since first publication. Above-trend growth won't be sustained Japan’s economy expanded at an extremely rapid pace last quarter, but we expect a renewed slowdown across the second half of the year. The …
15th August 2023
This page has been updated with additional analysis since first publication. Wage growth should slow as labour market slackens Wage growth remained strong in June as summer bonuses rose, but regular pay growth slowed and is unlikely to become strong …
8th August 2023
Labour market may hold up better than we expect The fall in the job-to-applicant ratio to its lowest in a year suggests that labour market conditions are continuing to loosen despite a fall in the unemployment rate in June. The labour force increased by …
31st July 2023
This article has been updated with additional charts and analysis since it was first published. Firms downbeat about output in Q3 June’s activity data were broadly positive for Q2, with both the industrial production and capital goods shipments data …
28th July 2023
The Bank of Japan announced today that it will allow 10-year yields to rise to 1.0% instead of the current ceiling of 0.5%. We still think that a slowdown in inflation will convince the Bank to keep its short-term policy rate unchanged over the coming …
This article has been updated with additional charts and analysis since it was first published. Upside risks to our services inflation forecasts Headline inflation was unchanged in Tokyo this month, but a jump in services inflation helped power a renewed …
24th July 2023
Note: Join our Asia Drop-In on whether China is in a balance sheet recession, the July BOJ meeting and more at 09:00 BST/16:00 SGT on Thursday, 27 th July . Register here . This article has been updated with additional analysis and charts since it was …
21st July 2023
This article has been updated with additional charts and analysis since it was first published Inflation should fall back towards target through year-end Electricity tariff hikes that went into effect last month led to a rise in headline inflation. …
17th July 2023
This article has been updated with additional charts and analysis since it was first published Exports picking up but downturn still on the cards The trade deficit narrowed in June as export values rose faster than import values, largely reflecting the …
This article has been updated with additional analysis and charts since it was first published. Business investment probably still grew in Q2 The fall in “core” machinery orders in May points to a significant fall in spending on machinery and transport …
12th July 2023
Strong wage growth in May won’t last Regular wage growth hit a near three-decade high in May and bonus payments surged, resulting in a jump in labour cash earnings. But we wouldn’t read too much into the result, since it appears to be mostly driven by a …
7th July 2023
This page has been updated with additional analysis and charts since it was first published Economy probably won’t do as well as Q2 Tankan suggests Today’s Tankan survey showed a turnaround for the flagging manufacturing sector, while the services sector …
3rd July 2023
This article has been updated with additional analysis and charts since it was first published Downhill from now for underlying inflation The end-month data rush mostly affirms our view of the economy. The first fall in underlying inflation in Tokyo in …
30th June 2023
This page has been updated to include additional analysis and charts. PMIs suggest economic downturn might have started in June The fall in manufacturing PMI readings in June’s flash estimates suggest the recession we’re expecting in the second half might …
23rd June 2023
Inflation to dip below 3% by year-end Headline inflation fell nationwide largely in line with the timelier Tokyo CPI data, while once again, underlying inflation rose despite that. As falling import price inflation brings down inflation in consumer prices …
22nd June 2023
This page has been updated to include additional analysis, charts and a table. Inflation should fall below 3% by year-end Nationwide inflation played out largely in line with the timelier Tokyo CPI data in May. Headline inflation fell largely due to a …
More inaction to come As was widely expected, the Bank of Japan didn’t make any policy changes to either the short-term policy rate or Yield Curve Control (YCC) at Governor Ueda’s second meeting today. There was also no change to the Bank’s less upbeat …
15th June 2023
Struggling exports a prelude of downturn to come Export values inched up by just 0.6 y/y in May. That translated into a 3.1% m/m fall in seasonally adjusted terms. With export prices having risen by 2.0% m/m in May, volumes probably saw a sharp fall, …
14th June 2023
Wage growth still set to fall sharply in H2 Labour cash earnings rose by 1.0% y/y in April, marking a slowdown from 1.3% in March. That was due to a 0.3% fall in overtime pay and bonus payments staying virtually flat with just a 0.2% rise. By contrast, …
5th June 2023
Further contractions in industrial production in store The weakness in both industrial activity and retail spending in April points to a poor start to Q2 for the economy after it expanded by 0.4% q/q last quarter, posing downside risks to our current …
30th May 2023
Looming recession will see unemployment rate hit 3% The unemployment rate fell from 2.8% to 2.6% in April, a better outturn than the 2.7% we and the consensus had pencilled in. The job-to-applicant ratio was unchanged at 1.32, arresting a downtrend that …
29th May 2023
Inflation has just a bit more to climb Headline inflation in Tokyo fell from 3.5% to 3.2% in May, largely due to a sharp 8.2% fall in energy inflation, which took away almost 0.5%-pts from headline inflation. The drop shows that lower energy import prices …
25th May 2023
PMIs suggest economy strengthened further in May May’s flash PMI readings were the strongest they’d been in a while and point to gains in both industrial production and services spending, supporting our assessment that the economy continued to grow in Q2. …
23rd May 2023
Business investment likely off to a slow start this quarter We already know that business investment rose last quarter. As such, we wouldn’t read too much into the fall in machinery orders in March. Machine tool orders data point to a slight fall in …
22nd May 2023
Underlying inflation to rise further before falling due to stubborn food price pressures Headline inflation rose from 3.2% to 3.5% in April, despite a 4.4% fall in energy prices. As was the case with Tokyo, that was largely due to a rise in underlying …
18th May 2023
Falling energy imports supported trade balance The trade deficit narrowed in April as export values rose faster than import values. That’s more a reflection of lower energy prices, which decreased the value of fuel imports. Export values increased by 2.6% …
Decent rebound in GDP as investment surprised to the upside GDP surprised to the upside last quarter, mainly because of stronger performances in private consumption and business investment than preliminary data had indicated. That suggests that there is …
16th May 2023
More scope for wage growth to slow Labour cash earnings rose by 0.8% for the third consecutive month, broadly in line with our 0.7% forecast and far below the average 1.8% increase across 2022. As we had expected, regular earnings growth slowed from 0.8% …
8th May 2023
Yield Curve Control here to stay for now The B ank of Japan predicted that inflation will fall well below its 2% target in FY2025 when it kept policy settings unchanged today. And while it pledged to conduct a review into the Bank’s policy measures, the …
28th April 2023
Resilience in activity won’t last The further rise in industrial production and retail sales in March means that the economy may not have shrunk in Q1 after all, but with recessions in major trading partners looming we still expect GDP growth to be weaker …