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Deficit to narrow by end-2022 The trade deficit widened but stayed below the record high in August, but with the yen strengthening significantly in recent weeks, the deficit should narrow later this quarter. Export values rose by a slower 25.3% y/y …
17th November 2022
Losing streak has further to run Weakness in the manufacturing sector led to “core” machinery orders falling for a second consecutive month in September. Worse still, machine tool orders indicate that the two-month losing streak, rare as it is, hasn’t …
16th November 2022
Technical recession looms in H1 2023 Japan’s economy contracted in Q3, with private consumption and business investment posting far weaker results than timelier data had suggested. Growth should turn positive in Q4, amid a rebound in inbound tourism and a …
15th November 2022
Q4 spending rebound may not materialise Current readings picked up in October’s Economy Watchers Survey but remain well short of the peaks seen after previous virus waves ended. The deepening gloom captured by the outlook readings suggest that spending …
9th November 2022
Regular wage growth to fall alongside inflation and profitability The 2.1% rise in labour cash earnings in September was the fastest since 1997 but it was mostly driven by volatile bonus payments and won’t be sustained. However, regular earnings growth …
8th November 2022
Capital goods shipments strength to wane, retail sales outlook buoyant Industrial production declined in September whereas retail sales values saw another relatively strong rise. We are expecting a strong fourth quarter for retail sales, but industrial …
31st October 2022
Government subsidies to tame surging inflation The unemployment rate rose slightly in September on the back of a large jump in the labour force but a continued rise in the job-to-applicant ratio suggests that the labour market will tighten again before …
28th October 2022
Higher inflation from weaker yen won’t prompt BoJ tightening Headline inflation remained at a three-decade high in September and will climb slightly higher by early 2023. That said, the Bank of Japan will remain steadfast in maintaining its ultra-easy …
21st October 2022
Weaker yen to offset falling commodity prices The trade deficit narrowed from its record high in August, but with the yen weakening significantly in recent days, any further narrowing of the deficit will likely be delayed. Export values accelerated to …
20th October 2022
All signs still point to strong Q3 business investment Although “core” machinery orders dropped sharply in August due to a crash in non-manufacturing orders, Q3’s average still points to an expansion in non-residential investment growth this quarter, …
12th October 2022
Spending to recover in earnest Q4 Current readings picked up in September’s Economy Watchers Survey but fell well short of the peaks seen after previous virus waves ended. However, we suspect that the fading virus wave, the domestic travel subsidy …
11th October 2022
Fastest rise in regular earnings in a generation won’t be sustained The 1.6% annual rise in regular earnings last month was the largest since 1997 and jars with the fact that the labour market still isn’t as tight as it was pre-pandemic. We suspect …
7th October 2022
Record capex projections likely overstate real investment growth Today’s Tankan survey suggests that while the services sector is benefitting from the subsiding virus wave, the outlook for the manufacturing sector continues to worsen. The Tankan’s …
3rd October 2022
Labour market continues to tighten, while consumers shrug off virus wave The unemployment rate dropped to a four-month low in August and a continued rise in the job-to-applicant ratio suggests that the labour market will continue to tighten. Meanwhile, …
30th September 2022
Demand woes persist while inflation will stay high for longer September’s flash PMIs indicate yet another slowdown in the manufacturing sector, while services appear to be recovering from the recent record virus wave. According to today’s flash …
26th September 2022
Inflation will get another boost in October Headline inflation jumped in August to yet another three-decade high and it still has a stretch higher to climb. That said, the Bank of Japan will remain steadfast in maintaining its ultra-easy monetary …
20th September 2022
Trade deficit to shrink as import prices ease Japan’s trade deficit widened to yet another record high in August, but the peak shouldn’t be far away now. Commodity prices continue to ease, and the yen should end the year stronger than its current lows, …
15th September 2022
Business investment to remain strong this quarter Although the surge in “core” machinery orders in July was driven by a handful of non-manufacturing sectors, the result still points to strong non-residential investment growth this quarter, chiming with …
14th September 2022
Economy to pick up as virus wave subsides The muted uptick in current readings in August’s Economy Watchers Survey indicates that the economy was still weighed down by the record Covid-19 wave last month, while buoyant outlook readings point to a quick …
8th September 2022
Consumers to fall back on pandemic savings as real wages fall Labour cash earnings growth weakened slightly in July as growth in bonuses slowed and further moderation is in store from August with the end of the summer bonus season. Overall earnings growth …
6th September 2022
Q2 GDP to be revised down The smaller increase in capital spending reported in today’s “Financial Statements Statistics of Corporations” means that Q2 GDP will likely be revised downward slightly in next week’s second estimate. Capital spending excluding …
1st September 2022
Retail sales recovery in July belies underlying weakness Industrial production rose at a solid pace in July whereas most of the rise in retail sales values reflected soaring prices. While the manufacturing sector should bounce back this quarter, services …
31st August 2022
Mounting indication that labour force has peaked The unemployment rate stayed unchanged in July and we do not see much room for further tightening in the labour market in 2022. The labour force shrank by 0.06% m/m in July, but with the adult population …
30th August 2022
Manufacturing and services fall further while prices seem to peak August’s PMIs indicate a further slowdown in the manufacturing sector as demand slumped even further, while services continue to bear the brunt from the record Covid-19 wave. According to …
23rd August 2022
Inflation summit in sight, but BoJ will not budge Headline inflation was the highest since 1991 in July and we think it still has higher to climb. But this will not make the Bank of Japan budge on its ultra-easy monetary policy. Headline inflation climbed …
19th August 2022
Trade deficit should narrow again Japan’s trade deficit widened to a record high in July but it should start to shrink over the coming months as supply shortages and commodity prices continue to ease. Export values grew by 19.0% y/y, slowing only slightly …
17th August 2022
Recovery will persist through second half Japan’s economy grew in Q2 driven mainly by private consumption, though the overall figure disappointed mainly due to fluctuations in stockbuilding that won’t last. The recovery should persist through Q3 and Q4, …
15th August 2022
Minimum wage hike to provide support The jump in wage growth in June was mostly driven by a surge in summer bonus payments and the Bank of Japan’s 3% wage growth target will remain out of reach for a while yet . More positively, the strength in overtime …
5th August 2022
Rebound in industrial output has further to run While industrial output bounced back strongly in June, the recovery in the labour market is stalling and consumer spending is faltering. One reason is that rising consumer prices are weighing on confidence. …
29th July 2022
Manufacturing slowdown continues, services hit by fresh virus wave July’s PMIs suggest that the manufacturing sector is slowing as demand weakens, while the latest Covid-19 is starting to hit the services sector. According to today’s flash estimate, the …
22nd July 2022
“Core” goods inflation will accelerate further While inflation fell slightly in June, it will remain above the BoJ’s 2% target until early-2023, while underlying inflation will approach 2%. However, the Bank won’t respond with tighter policy. The weaker …
Trade deficit should narrow again Japan’s trade deficit in June was the largest it has been since 2014 but the recent fall in commodity prices suggests it will narrow again before long . The 19.4% annual rise in export values marked an acceleration from …
21st July 2022
Wage growth to settle around 1% The slowdown in wage growth in May was entirely due to volatile bonus payments. Nonetheless, we don’t expect wages to grow fast enough for the Bank of Japan to start tightening policy anytime soon . The 1.0% y/y rise in the …
5th July 2022
Tankan signals soaring capital spending Today’s Tankan survey suggests that while the services sector is benefitting from the easing of virus restrictions, the outlook for the manufacturing sector is worsening. Meanwhile, the labour market didn’t tighten …
1st July 2022
Recovery disappointing yet again The plunge in industrial output in May suggests that Japan’s recovery is disappointing yet again. The upshot is that it will take until the second half of the year for GDP to surpass its pre-virus level . The 7.2% m/m …
30th June 2022
Consumer spending will disappoint yet again The disappointing rise in retail sales in May poses downside risks to our upbeat forecasts for consumption growth in Q2 . The 0.6% m/m rise in retail sales values in May marked the third consecutive rise but …
29th June 2022
Inflation to remain above BoJ target until early-2023 While inflation didn’t rise any further in May, it will remain above the BoJ’s 2% target until early-2023, while underlying inflation will approach 2%. However, the Bank won’t respond with tighter …
24th June 2022
Supply shortages still biting but consumption bouncing back The PMIs suggest that supply shortages are still holding back manufacturing output and adding to price pressures. On a more upbeat note, the surveys also point to a strong pick-up in consumption …
23rd June 2022
Exports to stay soft in near term Export volumes recovered a bit in May, but they are likely to stay weak in the near term until supply shortages dissipate and allow exporting automakers to ramp up production again. The 15.8% annual rise in exports in May …
16th June 2022
Wage growth won’t reach the BoJ’s threshold anytime soon While regular wage growth is approaching its pre-pandemic peak, it won’t reach the 3% the Bank of Japan is aiming for anytime soon . More positively though, with overtime working hours reaching …
7th June 2022
Q2 rebound could disappoint While employment recovered sharply in April and should soon reclaim its pre-pandemic level, the weakness in both goods production and goods consumption last month suggests that the economy’s Q2 rebound could be more muted than …
31st May 2022
Industrial activity still held back by supply shortages While the flash manufacturing PMI was little changed in May, the details suggest that supply shortages worsened yet again, weighing on output and lifting prices. According to the flash estimate …
24th May 2022
Above-target inflation won’t prompt policy tightening Inflation rose above the Bank of Japan's 2% inflation target for the first time since 2008 and we expect underlying inflation to approach 2% later this year, but this won't prompt the Bank to tighten …
20th May 2022
Net trade to boost growth this quarter Export volumes fell in April, and they are likely to remain subdued over the coming months until supply shortages dissipate and allow exporters to make up for lost ground. The 12.5% annual rise in exports in April …
19th May 2022
Consumer caution to soften reopening rebound Japan’s economy only contracted slightly in Q1 as consumption held up well despite prolonged restrictions during the Omicron wave. But while the economy will bounce back this quarter, we think Japan’s delayed …
18th May 2022
Wage growth to touch 2% Nominal wage growth stayed at 1.2% in March and we think it could touch 2% over the coming months as overtime and bonus payments get back to their pre-virus levels. But with base pay growth still weak, we think overall wage growth …
9th May 2022
Activity to recover strongly across Q2 The strong rebound in retail sales in March suggests that the post-Omicron recovery got off to a good start. Meanwhile, industrial production edged up last month, but it will continue to be held back by supply …
28th April 2022
Employment to continue to rebound Employment bounced back in March and it should continue to recover over the coming months as long as the reopening doesn’t go into reverse again. That should push the unemployment rate back down to its pre-virus level of …
26th April 2022
All set for 2% Inflation picked up in March due to a further rise in utilities inflation and a jump in food inflation. And headline inflation will hit 2% in the April data released in just under a month’s time as most of the drag from mobile phone tariffs …
22nd April 2022
Shortages still hampering exports The export data were disappointing again in March, though exports are set for a strong rebound once supply shortages ease in hard-hit sectors such as automobiles. The 14.7% annual rise in export values in March was weaker …
20th April 2022