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Household incomes will continue to rebound The sharp drop in the number of furloughed workers in May supports our view that household incomes will rebound in the second half of the year. And while industrial production plunged again in May, it should also …
30th June 2020
Rebound in consumption will continue to disappoint The subdued rise in retail sales in May suggests that the lifting of the state of emergency didn’t provide a big boost to consumption and we reiterate our forecast of a 9% q/q plunge in Q2 GDP . And the …
29th June 2020
Services sector set to recover further While the manufacturing PMI weakened a little further in June, the rebound in the services PMI has further to run as virus-related restrictions are eased . As usual, the surveys were conducted since the middle of …
23rd June 2020
Underlying inflation will be negative across H2 Headline inflation was unchanged last month but the slow recovery in demand over the coming months should cause excess capacity to rise further. As such, we expect inflation to turn consistently negative in …
19th June 2020
May should prove nadir for trade Import values fell much more than export values in May but that was mostly due to lower crude oil prices. Across Q2, net trade provided a sizeable drag on GDP growth. However, conditions should improve over the coming …
17th June 2020
Slump in orders points to sharp fall in business investment The large fall in machinery orders in April supports our forecast that non-residential investment will slump in Q2. With business confidence subdued, a recovery before the end of the year is …
10th June 2020
Wages falling already Wage growth turned negative in April at the height of efforts to contain the virus, and we expect wages to fall further over the coming months. According to today’s preliminary estimate, labour cash earnings growth fell from +0.1% to …
9th June 2020
Recovery will be slow going The upward revision to Q1 GDP displayed in the revised estimate is cold comfort given that output is plummeting this quarter. We expect GDP to fall by another 9% this quarter. According to the second estimate released today, …
8th June 2020
Economy dealt severe blow in April, but road to recovery started in May The huge fall in industrial production and retail sales in April support our below-consensus forecast that the economy will contract by 12% q/q this quarter. The unemployment rate is …
29th May 2020
Inflation drops sharply and will turn deeply negative Headline inflation turned negative in April for the first time since 2016 adjusting for the impact of October’s sales tax hike. We expect it to weaken further over the coming months as services and …
22nd May 2020
Slump starting to abate, but rebound will be slow going The small pick-up in the composite PMI in May suggests that activity is no longer collapsing as dramatically as it was in April, but the survey doesn’t point to a rebound in output yet. According to …
21st May 2020
Exports were plummeting already in April Exports plunged in April and are set to continue falling sharply for a while yet with economic activity in Japan’s main trading partners remaining extremely depressed. The 21.9% annual fall in export values in …
Non-residential investment will collapse Machinery orders held up surprisingly well in March but we already know from the national accounts that business investment was sputtering at the end of Q1 with much darker skies awaiting in Q2. The 0.4% m/m fall …
20th May 2020
Economy in recession before full force of corona containment hit The fall in output in the first quarter suggests the spread of the virus had already dealt a significant blow to economic activity in March with much worse to come in Q2. A double-digit fall …
18th May 2020
This should be as bad as it gets The further fall in the Economy Watcher’s Survey (EWS) in April underlines that consumption will be extremely weak across Q2. But while all components fell to new depths, this should mark the trough in business conditions. …
13th May 2020
Wage growth won’t be positive for much longer Wage growth slowed sharply in March and with the unemployment rate set to rise considerably over the coming months we think it will turn deeply negative before long. According to today’s preliminary estimate, …
8th May 2020
Household spending evaporating Consumer confidence sank to a record low in April. That lends further credence to the view that a consumption-led plunge in economic activity is underway this quarter. We are forecasting a 12% q/q contraction in GDP in Q2. …
30th April 2020
Corona containment harmed activity in March with much worse to come While both industrial output and retail sales held up a little better than we expected in March, they still fell sharply. And with efforts to contain the virus having been stepped up …
Unemployment rate will rise sharply The unemployment rate rose in March and it’s set to spike much higher over the coming months. The labour force fell -0.1% m/m, while employment dropped -0.16% m/m. In annual terms, both rose just 0.1%. (See Chart 1.) As …
28th April 2020
Deflation to make unwelcome return Headline inflation was unchanged in March, but we suspect this may be the last positive reading for a while yet. Corona containment and the prior plunge in oil prices should translate into inflation turning deeply …
24th April 2020
Surveys probably understating the severity of the downturn The slump in the composite PMI to a record-low in April points to GDP falling by at least 7% in Q2, but we think the survey is understating the severity of the downturn. The flash estimate of the …
23rd April 2020
Trade flows are plummeting this quarter Exports fell sharply in March and are set to plummet this quarter as economic activity in most of Japan’s major trading partners has collapsed. The 11.7% annual fall in export values in March was more pronounced …
20th April 2020
Consumption plunging to new depths The collapse in the Economy Watcher’s Survey (EWS) in March to its lowest level ever supports our view that consumption will fall off a cliff in Q2. Almost all indicators plummeted, suggesting the brief thaw in economic …
8th April 2020
Business investment to plunge this quarter The slight rise in machinery orders in February suggests that business investment was weathering virus-related disruption well back then. But with measures to contain the virus severely harming domestic and …
Wage growth to turn negative before long Wage growth weakened a little in February and we think it won’t be long before it turns negative as the coronavirus outbreak generates large amounts of slack in the labour market. According to today’s preliminary …
7th April 2020
Not quite the bloodbath expected, but worse to come While the Q1 Tankan survey held up slightly better than we were expecting, it still showed a marked deterioration in business conditions. And with sentiment set to deteriorate further as lockdowns across …
1st April 2020
Economy was holding up well before corona collapse Activity indicators show that the economy continued to expand in February. Unfortunately, domestic and external demand have since collapsed, so output is set to contract sharply this year. The …
31st March 2020
Services sector hit hard by coronavirus outbreak While the manufacturing PMI didn’t fall as sharply as we had anticipated in March, the plunge in the services sector underlines that the coronavirus outbreak will result in a sharp slowdown in activity. The …
24th March 2020
Inflation to turn negative this year Inflation fell in February, and we expect it to moderate sharply this year as capacity shortages evaporate and the coronavirus opens up slack in the economy. By far the deepest downturn since 2009 should cause core …
19th March 2020
Resilience in exports won’t last Exports bounced back in February even as China’s economy came to a standstill. But with the coronavirus now disrupting economic activity across the globe, that resilience won’t last. The 1.0% annual decline in export …
18th March 2020
Business investment set to fall sharply this year The slight rise in machinery orders in January suggests that business investment was recovering – albeit slowly – before the coronavirus began to dent economic activity from all angles. We think a sharp …
16th March 2020
Spread of coronavirus will deal severe blow to economy The plunge in the Economy Watcher’s Survey (EWS) in February to its lowest level since the 2011 tsunami suggests that the intensified spread of the coronavirus will cause consumer spending to fall …
9th March 2020
Economy is probably in recession A disastrous Q4 following the sales tax hike was shown to have been even worse in the second estimate of GDP. That supports our bearish view that output will fall by 1% this year. It also further raises the chances of …
Wage growth to remain soft as labour market loosens The sharp rise in wage growth in January was down to yet another sampling distortion. A more accurate measure showed that wage growth softened and we expect labour earnings to continue to disappoint this …
6th March 2020
Rebound in industrial production unlikely to last The coronavirus is likely to knock off course the slight recovery observed in the manufacturing and retail sectors last month. As such, we expect the unemployment rate to rise further over the coming …
28th February 2020
Damage from coronavirus starting to show The renewed drop in the manufacturing PMI coupled with a slump in the services PMI suggests that the coronavirus has started to take a toll on Japan’s economy. The fall in the Jibun Bank flash manufacturing PMI …
21st February 2020
Core inflation to fall this year Headline inflation edged down in January and we expect it to moderate further this year as capacity shortages diminish. A contraction in GDP this year should lead to easing price pressures, offsetting a boost to prices …
Sizeable drag on GDP growth from net trade in Q1 Exports fell by less than expected last month but net trade is set to be a major drag on GDP growth this quarter. Coronavirus-related disruption should contribute to net trade knocking around 0.6%pts off …
19th February 2020
Japan’s economy to contract in 2020 The sharp drop in output after October’s sales tax hike supports our view that Japan’s economy will shrink this year. But with capacity shortages still tight and underlying inflation holding up, we still expect the Bank …
17th February 2020
Economy defied coronavirus in January The marked improvement in the Economy Watchers Survey (EWS) in January suggests household spending bounced back strongly last month with no sign of a drag on sentiment from the coronavirus. Both household-related …
10th February 2020
Wage growth set to remain sluggish this year With the unemployment rate set to rise, we expect the softness of wage growth in December to continue into 2020. We are forecasting a disappointing 0.2% increase in labour cash earnings this year. According to …
7th February 2020
Positive end to 2019 but consumption remains soft While consumer spending remained subdued in December following October’s sales tax hike, the continued resilience of the labour market suggests that this has yet to discourage firms from hiring new …
31st January 2020
Consumer spending set to disappoint this year Consumer confidence was unchanged in January, suggesting households are still reluctant to spend in the wake of the sales tax hike. We think consumer spending will remain soft, which should contribute to a …
29th January 2020
Gloom lifting from manufacturing sector January’s flash manufacturing PMI showed activity in the sector has finally started to rebound. That’s consistent with recent signs of recovery in domestic and global demand. However, we think any improvement in …
24th January 2020
Underlying inflation to moderate this year While headline inflation rose sharply again in December, we expect it to settle at around 0.5% this year. Higher energy inflation is likely to be offset by weaker underlying price pressures caused by easing …
Net trade boosted GDP growth last quarter We estimate that net trade boosted GDP growth by around 0.4 percentage points in Q4. However, much of that reflects soft domestic demand following October’s sales tax hike. We expect the external sector to drag on …
23rd January 2020
Business investment will probably fall this year The surge in “core” machinery orders in November was largely due to a spike in transport and postal activities and we still expect non-residential investment to fall this year. Orders of manufacturing …
16th January 2020
Consumer spending to remain subdued this year The small improvement in the Economy Watchers Survey (EWS) in December suggests household spending was slow to recover from October’s sales tax hike. Both household-related activity and employment conditions …
14th January 2020
Rebound in consumer spending to continue Consumer confidence edged up in December and suggests that consumption continues to recover from the slump after October’s sales tax hike . The headline index climbed from 38.7 to 39.1 and has risen by 3.5 point …
8th January 2020
Mini loosening in labour market to weigh on wage growth Overall wage growth was the weakest it has been in six months in November and the increase in the unemployment rate we are anticipating should ensure it will remain soft over the coming months. We …