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Job vacancies haven’t surged in Japan because the participation rate has risen since the start of the pandemic and there hasn’t been a “Great Resignation” amongst Japanese workers. With the labour market set to loosen this year, wage growth will remain …
5th June 2023
This dashboard tracks the evolution of monetary conditions in Japan and our latest policy forecasts. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, contact …
This dashboard presents our latest macro forecasts for Japan out to 2050. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, contact sales@capitaleconomics.com … Japan …
Policymakers warn against selling the yen The yen made headlines this week after breaching 140 against the greenback, hitting 140.93 at one point on Tuesday. That’s the weakest it had been since November last year and prompted Japanese policymakers to …
1st June 2023
Balanced risks to Q2 GDP outlook April’s activity data were a mixed bag. The fall in industrial production and sharp drop in retail sales volumes pose downside risks to our Q2 GDP growth forecast . By contrast, capital goods shipments data suggest …
31st May 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
Many commentators have pinned the recent outperformance of Japan’s stock market on the stronger focus by Japanese firms to maximise shareholder value. But while those efforts showed some success in the run-up to the pandemic, there hasn’t been much …
Unemployment rate still set to rise in H2 The unemployment rate reversed the sharp rise in March last month and the job-to-applicant ratio stabilised, but a recession in H2 should still see the unemployment rate peak at 3% by year-end. The labour force …
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
Inflationary pressures broadening even further We’ve been highlighting the increasingly broad-based nature of price pressures in Japan and there’s been no let-up. All three underlying measures of inflation published by the Bank of Japan increased in …
26th May 2023
Inflation to fall below 3.0% by year-end Tokyo headline inflation fell to 3.2% in May largely due to a sharp fall in energy inflation, but inflation excluding fresh food and energy ticked up due to faster gains in “core” goods prices. We still expect a …
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
This dashboard tracks the evolution of inflation in Japan and our latest forecasts. This dashboard If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, contact …
This dashboard explores the latest labour market data for Japan and provides our forecasts. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, contact …
This dashboard explores the latest consumer spending data for Japan and our forecasts. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, contact sales@capitaleconomics.com …
This dashboard explores the latest activity data for Japan and provides our latest GDP forecasts. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, contact …
Most of the recent acceleration in services inflation reflects pass-through of higher goods prices. While firms have become more willing to pass on higher input costs, we still think that sluggish wage growth and the recent slump in import prices means …
22nd May 2023
Business investment in for a tough H2 We already know that business investment rose despite a plunge in capital goods shipments last quarter . As such, we wouldn’t read too much into the fall in machinery orders in March. The bigger picture is that as …
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 …
Consumers running out of steam The 0.4% q/q expansion in Q1 real GDP reported on Wednesday outperformed the 0.2% we and the consensus had expected. One reason was that private consumption rose at a quicker 0.6% q/q than the 0.4% the consensus was …
19th May 2023
Inflation should fall rapidly in H2 on stronger yen, weaker wage growth Underlying inflation pushed past 4.0% for the first time in 40 years partly due to a spike in food inflation. Meanwhile, services inflation set a fresh 30-year high, largely …
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
Exports outlook improving in Q2, but not for long The trade deficit narrowed in April as export values rose faster than import values, largely reflecting the faster fall in import prices. Export climate readings suggest export volumes will continue to …
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% …
Exports downturn to drag economy into recession in H2 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 …
17th May 2023
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
Ueda leaves door open to acting before full review Bank of Japan Governor Ueda spoke on Tuesday in the Diet and mostly repeated what he said in the Bank’s post-meeting press conference on 28 th April, when he left monetary policy settings unchanged in his …
12th May 2023
Governor Ueda presided over his first policy meeting late last month and opted to keep all monetary policy settings, including Yield Curve Control (YCC), completely unchanged. To be sure, Mr Ueda also announced that the Bank will conduct a thorough review …
11th May 2023
Brighter outlook in Q2 The further rise in both the current and outlook readings point to continued upward momentum in services spending this quarter. Meanwhile, manufacturing conditions fell slightly but remained robust, boding well for industrial …
Gloomy wage growth outlook in H2 2023 Wage growth held steady in March from February, as a further slowdown in regular and overtime pay growth was offset by a decent increase in volatile payments. We still see further scope for wage growth to slow this …
9th 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
Pay at small firms not keeping up with large firms While wage growth has been very strong by historical standards in recent months, wages have risen faster for employees of larger firms than at smaller firms. (See Chart 1.) Chart 1: Labour Cash Earnings …
5th May 2023
The slowdown in regular earnings at the start of the year largely reflects sampling changes, with an unchanged sample of firms reporting continued strong wage growth. However, with inflation set to come off the boil before long and the labour market …
4th May 2023
Japan’s large corporate sector surpluses are a key source of deflationary pressure. Corporate savings surged in the 1990s, primarily because net interest payments slumped, and have since remained stubbornly high. Unfortunately, workers have benefited …
2nd May 2023
The Bank 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 its policy measures, the results will only be unveiled next year. The …
28th April 2023
Export downturn not over yet Export volumes rose for the second consecutive month in March and with PMIs in Japan’s main trading partners rebounding, the further fall in export volumes we had pencilled in for Q2 looks increasingly unlikely. We’ve now …
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 …
Economy may not have shrunk in Q1 The end-month data rush only adds to the dilemma the Bank of Japan is facing. While labour market conditions are now easing in earnest, underlying inflation is set to surpass 4% at the national level. On balance though, …
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 …
Labour market loosening in earnest Labour market conditions loosened visibly in March and there’s room for it to loosen further given the recession we’re expecting in the second half. Meanwhile inflation reversed course and increased in April. Our …
27th April 2023
The turmoil in the US banking system is likely to set off the worst decline in Japan’s commercial real estate prices since the Global Financial Crisis by prompting foreign investors to stop buying Japanese assets. In the worst-case scenario, GDP will …
Note: We’ll be discussing the BOJ’s April decision and the fate of YCC in a 20-minute online briefing at 09:00 BST/16:00 SGT on Friday, 28th April . Register here . GDP growth falling short of expectations, but price pressures increasingly broad-based …
21st April 2023
Note: We’ll be discussing the BOJ’s April decision and the fate of YCC in a 20-minute online briefing at 09:00 BST/16:00 SGT on Friday, 28 th April . Register here . BoJ will signal inflation target close to being met The Bank of Japan will release …
Exports downturn could prove short-lived April’s flash PMIs point to further upside risks to our GDP forecasts, indicating a broad improvement in both domestic and external demand. That suggests the exports downturn may be short-lived. Meanwhile, services …
Stronger yen, falling commodity prices to cool decades-high inflation Underlying inflation saw a sizeable increase in March, while headline inflation inched down thanks to falling energy prices. A stronger yen and falling import price inflation should …
PMIs suggest exports downturn may be short-lived April’s flash PMIs point to further upside risks to our forecasts, pointing to a broad improvement in both domestic and external demand and suggesting that the exports downturn will be short-lived. …
20th April 2023
Lower import price inflation will tame underlying inflation March data were very much in line with the Tokyo CPI. Underlying inflation saw a sizeable increase in March, while headline inflation inched down thanks to falling energy prices. A stronger yen …
The trade deficit narrowed in March as import values fell faster than export values. Data for Q1 so far are still consistent with a negative contribution from net trade to GDP. Export values surprised analysts to the upside, rising by 4.3% y/y in March …