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Employment to return to pre-virus level by year-end While the Delta wave may reverse some of July’s jump in employment, we think vaccines will allow employment to surpass its pre-virus level by the end of this year. Meanwhile, the fall in industrial …
31st August 2021
Consumption will fall yet again in Q3 While retail sales recovered further in July, the high frequency data point to a renewed fall in August as the Delta wave intensified and we’ve pencilled in a 0.8% drop in private consumption in Q3 . According to …
30th August 2021
Services sector to recover as most seniors now vaccinated Today’s flash PMIs suggest that the worsening Delta outbreak may yet result in a fall in consumption this quarter. And with supply shortages intensifying, the manufacturing sector isn’t stepping …
23rd August 2021
Underlying inflation will continue to pickup While headline inflation rose in July due to a pickup in energy inflation, it’s far weaker than the figure initially reported for June due to the introduction of a new CPI basket this month knocking off 0.7%pts …
20th August 2021
Japanese exports to outperform other Asian countries Japan’s export volumes stagnated in July but given that a large share of those exports are cars and capital goods, we think they will rise again over the coming months. The slowdown in the annual growth …
18th August 2021
Delta has delayed not cancelled vaccine bounce Output only edged higher in the second quarter and won’t do much better this quarter as the Delta-driven fifth wave holds back consumer spending. But with the vaccine rollout still moving fast, a strong …
16th August 2021
Wage growth set to recover again The weakness in wage growth in June reflected both a slowdown in regular pay and a drop in summer bonuses. But with the labour market set to tighten and corporate profits on the mend, we think that wage growth will rebound …
6th August 2021
Activity to recover further despite Delta blip Retail sales, industrial production and employment all rebounded strongly in June, pointing to a sizeable recovery in activity in between the Alpha- and Delta-driven coronavirus waves. That supports our view …
30th July 2021
Services sector to recover as most seniors now vaccinated Today’s flash PMI suggests that the services sector was hit by Tokyo’s state of emergency but we still expect activity to recover towards the end of this quarter . The services PMI dropped from …
26th July 2021
Export tailwind weakening The rebound in exports showed further signs of slowing in June despite another high y/y growth rate caused by base effects. We think external demand will only provide a small tailwind to growth over the coming months as capital …
21st July 2021
Strong wage growth on the horizon While the further acceleration in wage growth in May was again largely down to favourable base effects, we think wage growth will stay elevated as the labour market tightens and vaccines fuel a further recovery in …
6th July 2021
Strong recovery in H2 The further rebound in the Q2 Tankan supports our view that the economy’s disappointing start to the year won’t prevent vaccines driving a strong rebound in the second half of the year. And firms’ upbeat capital spending plans …
1st July 2021
Output to recover as car chip shortages ease The plunge in industrial output in May probably reflects chip shortages, but firms’ production forecasts point to a marked rebound over the coming months . The 5.9% m/m drop in industrial production was the …
30th June 2021
Spending and employment will soon bounce back While the further rise in the unemployment rate last month suggests on-off restrictions are taking their toll on the labour market, employment should bounce back strongly soon. Meanwhile, consumer spending …
29th June 2021
Supply shortages to continue to hamper manufacturers Today’s flash PMIs suggest that the onus is on the services sector to drive the recovery over the coming months. The fall in the manufacturing PMI suggests that that sector won’t rebound much further …
23rd June 2021
Upwards pressure on inflation from reopening to be muted Headline inflation rose sharply in May due largely to a pickup in energy inflation. But while we expect headline inflation to rise further over the coming months, in contrast to many other large …
18th June 2021
Export tailwind fading Despite the spectacular y/y growth rates in May, the rebound in exports is showing signs of slowing. Indeed, we doubt external demand will provide much of a tailwind to growth over the coming months as global consumer goods demand …
16th June 2021
Wage growth to stay strong While the marked acceleration in wage growth in April was largely down to favourable base effects, we think wage growth will remain strong throughout this year as the labour market tightens and overtime hours recover further as …
8th June 2021
Output unlikely to recover in Q2 The sharp fall in retail sales and weaker than expected rise in industrial production in April suggests the economy was subdued even before states of emergency were declared, supporting our view that the economy won’t have …
31st May 2021
Unemployment rate to edge back down The unemployment rate spiked back up in April after a surprise sharp fall in March. However, we think the jobless rate will fall back to around 2.6% over the coming months as employment resumes its recovery. Employment …
28th May 2021
Manufacturing to keep recovering, services to remain weak Today’s flash PMIs suggest that the manufacturing sector will continue to recover as supply shortages are starting to ease. However, the plunge in the services PMI suggests that overall economic …
21st May 2021
Underlying inflation to rise further, but not much Inflation fell in April but that was almost entirely due to a plunge in mobile phone tariffs. Sifting through that distortion, headline inflation rose in April and will float higher over the coming …
Exports to rise at slower pace While export volumes edged higher in April, the rebound in exports is slowing and external demand is unlikely to provide much of a tailwind to growth over the coming months. Meanwhile, the muted rise in machinery orders in …
20th May 2021
Slow vaccination progress taking its toll The economy contracted yet again during the second state of emergency. With the medical situation still worsening during the current third state of emergency and the vaccine rollout too slow, it will take until …
18th May 2021
Wage growth has further to rise Wage growth turned positive for the first time since the pandemic began in March and we think it will accelerate further next month due to favourable base effects. Further ahead wage growth should remain strong due to the …
7th May 2021
Economy held up in Q1, but Q2 may yet be weaker The rebound in industrial production and the sharp drop in the unemployment rate in March are consistent with our view that the economy held up much better than most had anticipated during the second state …
30th April 2021
Consumer spending to flatline in Q2 The further rise in retail sales in March suggests that consumer spending was relatively strong in between the third and fourth waves of coronavirus. The strength in goods consumption in February and March won’t have …
28th April 2021
Inflation has further to rise Inflation continued to rebound in March mainly due to a further pickup in energy inflation. We think headline inflation will rise further and break past the lofty heights of +1% y/y later in the year. Headline CPI rose from …
23rd April 2021
Export tailwind fading While export values rose in March, the rebound in exports slowed significantly across Q1 and external demand is unlikely to provide much of a tailwind to growth this year. The 16.1% annual rise in export values in March was stronger …
19th April 2021
Business investment will resume recovery soon The sharp fall in machinery orders in February poses downside risks to our view that business investment continued to rise last quarter. However, the recovery in private investment should still gather pace …
14th April 2021
Recovery to gather pace again The further strong rebound in the Q1 Tankan supports our view that the economy’s recovery from the pandemic will gather pace again soon. And firms’ upbeat capital spending plans for the upcoming fiscal year bolster our view …
1st April 2021
Manufacturing output will resume its recovery The fall in industrial production in February came off the back of a strong January and shouldn’t prevent manufacturing output rising across Q1. And firms’ production forecasts for April point to a surge in …
31st March 2021
Economy may not have contracted in Q1 The strong rise in retail sales in February to their highest level since September 2019 supports our view that the economy just about avoided a contraction in Q1. And while the unemployment rate was unchanged in …
30th March 2021
Recovery from state of emergency slow going The slight rise in the composite PMI in March was a little disappointing given that most state of emergency declarations had been lifted and suggests that the economy may not be entering Q2 with much momentum. …
24th March 2021
Headline inflation could briefly hit 1% Headline inflation recovered further in February due mainly to a pickup in energy inflation and should continue to rebound over the coming months as energy becomes a significant tailwind. Headline CPI rose from …
19th March 2021
Net trade starting to drag on growth While some of the weakness in exports last month was due to the later timing of the lunar new year, export growth may have been outpaced by import growth this quarter. That suggests that net trade may have been a small …
17th March 2021
Business investment to rebound further The fall in machinery orders in January is not particularly surprising given that they had surged significantly above pre-virus levels in December. We still expect business investment to have risen a little further …
15th March 2021
GDP may still avoid a contraction in Q1 While the downward revision to Q4 GDP and the sharp fall in “core” household spending in January suggest that the economy faired a little worse than initially reported over the winter, we continue to expect the …
9th March 2021
Economic activity bouncing back fast from third wave The sharp rebound in the Economy Watchers Survey in February suggests economic activity is ending the quarter with some momentum. That supports our non-consensus view that the state of emergency won’t …
8th March 2021
Unemployment rate will fall further The unemployment rate fell in January despite the state of emergency, and it should fall further over the course of this year as employment rebounds in line with the economic recovery. Meanwhile, capital spending data …
2nd March 2021
Economy may avoid contraction this quarter The strong rise in industrial production and only tiny fall in retail sales in January suggest that the economy may not contract this quarter. And with the state of emergency set to end everywhere next Sunday, …
26th February 2021
Impact of state of emergency starting to fade The rebound in the composite PMI in February supports our view that the economy is coping with the second state of emergency better than most had anticipated . According to the flash estimate, the …
19th February 2021
Inflation will continue to recover Headline inflation recovered substantially in January due to the removal of the artificial drag from the Go To Travel campaign, and we think it will rebound further over the coming months. Headline CPI rose from -1.2% …
Exports won’t rise much further While some of the rise in exports in January was likely due to the timing of the lunar new year, they should have continued to rise faster than imports across this quarter, with net trade likely to provide a small boost to …
17th February 2021
Recovery to keep surprising to the upside The strong rise in GDP in Q4 left output just 0.5% below pre-virus levels. And while most economists expect a renewed contraction this quarter due to the second state of emergency, we think that output will be …
15th February 2021
December’s severe weakness a one-off The collapse in wage growth in December was entirely due to a fall in bonus payments. Wage growth will have bounced back in January and should soon turn positive as the labour market tightens and corporate profits …
9th February 2021
Third wave proving far less damaging than the first The resilience of the Economy Watchers Survey in January suggests that the third wave is causing far less economic damage than the first did. That supports our non-consensus view that the economy will …
8th February 2021
Economy should avoid contraction in Q1 While industrial production and capital goods shipments fell in December, firms’ ultra-upbeat production forecasts for January support our view that GDP will rise this quarter. Meanwhile, the unemployment rate was …
29th January 2021
Consumer spending to fall in Q1 The small fall in retail sales in December suggests that consumer spending only weakened slightly before the declaration of a state of emergency. However, it’s still consistent with our view that consumption will fall this …
28th January 2021
Second state of emergency far less damaging than previous one The small decline in January’s composite PMI is consistent with our view that the second state of emergency won’t throw the recovery off course . According to today’s flash estimate, the …
22nd January 2021