Filtered by Subscriptions: Japan Economics Use setting Japan Economics
Japanese firms’ holdings of interest-bearing assets have risen relative to their interest-bearing liabilities and some are suggesting that they benefit from rising interest rates as a result. But with domestic interest rates little changed as the Bank …
10th October 2022
Regular pay rising at the fastest rate in 25 years The preliminary estimate of labour cash earnings released today showed a 1.6% annual rise in regular pay in August, the largest rise in 25 years. We wouldn’t be surprised if that figure was revised …
7th 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 …
August surge largely due to favourable base effects Labour cash earnings jumped in August, but this was largely due to favourable base effects for hours worked and should slow over coming months. Preliminary estimates for August showed overall earnings …
Overview – In a difficult global environment, Japan's economy has benefitted in recent months from a reopening boom in consumption and the easing of supply shortages in industry. Those tailwinds will soon fade, while external demand will slow. As a …
5th 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
Capex projections scaled new heights 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 headline index for large …
Travel subsidies to return in October The government announced this week that it will once again be providing travel subsidies, this time under the National Travel Discount (NTD) program, from 11 th October through December. Prefectural governments get …
30th September 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, …
Industry to struggle while retail sales outlook improves Both industrial production and retail sales growth quickened in August and while the rebound in industrial production will lose steam, retail sales will continue to expand as the record virus wave …
Labour market will continue to tighten The unemployment rate dropped to a four-month low in August and the continued rise in the job-to-applicant ratio suggests that the labour market will continue to tighten. The labour force dropped by 70,000 last …
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
Post-virus services recovery underway September’s flash PMIs indicate yet another slowdown in the manufacturing sector, with the manufacturing PMI falling from 51.5 in August to 51. Demand weakened again but this appeared to be mostly caused by domestic …
First intervention to buy yen since 1998 In the wake of the Fed’s hawkish 75bp rate hike on Wednesday, the yen approached 146 against the dollar for the first time since 1998. Back then the government intervened to shore up the yen and it did so again …
23rd September 2022
Japan’s Ministry of Finance has intervened in support of the yen today, with the USD/JPY rate dropping from near 146 to ~143 at the time of writing, a ~2% appreciation in the space of an hour. Today’s decision effectively draws a line in the sand at 145 …
22nd September 2022
The Bank of Japan kept policy loose and retained its easing bias today and we think it won’t tighten policy even as underlying inflation reaches its 2% target. As was widely anticipated, the Bank kept its short-term policy rate at -0.1% and its target for …
Bank of Japan won’t tighten even as inflation rises well above target The Bank of Japan kept policy loose and retained its easing bias today and we think it won’t tighten policy even as underlying inflation reaches its 2% target. As widely anticipated, …
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
Inflation in final stages of ascent Headline inflation jumped in August to yet another high since 1991 and it still has a stretch higher to climb. That said, the Bank of Japan will remain steadfast in maintaining its ultra-easy monetary policy. Headline …
GPIF could shift back to domestic assets The release of stronger-than-expected US inflation figures on Tuesday contributed to a further rise in US long-term interest rates. They are now the highest they’ve been since mid-June. With the Bank of Japan …
16th September 2022
Deadline for applications under COVID-19 lending facility won’t be extended Interest rate targets will remain at current levels as surge in inflation won’t be sustained Bank will be able to ride out renewed pressure on 10-year yield target The Bank …
15th 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, …
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, which …
Strong US CPI data this week triggered a renewed slide in the yen to the brink of 145 and warnings from the Ministry of Finance that it could intervene ( 1 ).The Bank of Japan is also reported to have resorted to a yen rate check – calling dealers to …
14th 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 …
Business investment to remain strong this quarter Although the surge in “core” machinery orders growth in July was driven by a handful of non-manufacturing sectors, the result still points to strong non-residential investment growth this quarter, chiming …
We think the yen will strengthen against the US dollar over the next few years, as the headwinds that have driven the currency to multi-decade lows begin to unwind. The yen has fallen nearly 20% against the greenback this year, the most of any of the …
13th September 2022
Intervention unlikely but inflation would rise Despite warnings from the government that it would intervene against “rapid and one-sided moves” in the yen, the exchange rate fell this week to a 24-year low of 144 against the dollar and, so far, there …
9th 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
The Bank of Japan’s assets are falling for the first time since it embraced large-scale easing a decade ago, as banks are repaying emergency funds they borrowed during the pandemic. However, this is not holding back an acceleration in credit to …
6th 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 …
Real wages to continue shrinking but spending will be supported by savings 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 …
Adult population shrinking more quickly While Japan’s population peaked in 2010, it only edged down over the subsequent decade as positive net migration cushioned the decline in the “natural” population that was caused by deaths outstripping births. …
2nd 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
Recovery to stall by September Industrial production made another stride towards pre-virus levels in July but the recovery should stall by September. Meanwhile, retail sales are in for a weak quarter despite a decent showing in July, as soaring inflation …
Japan is facing its largest terms of trade shock since the second oil crisis in the early-1980s. While we don’t expect Japan to follow other advanced economies into recession, we’re slashing our 2023 GDP growth forecast from 2.6% to a below-consensus …
30th 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 …
Not much room left for further tightening 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 shrinking …
Nuclear restarts still in the balance The timely Tokyo CPI showed that inflation jumped from 2.5% to 2.9% in August. That was partly due to the fading drag from last year’s mobile phone tariff cuts, but another key driver was the 29% y/y surge in …
26th August 2022
Soaring electricity and gas prices will help lift inflation above 3% by year-end. But with that boost unlikely to be sustained, the Bank of Japan won’t see a need to tighten monetary policy. The surge in food prices and the fading drag from last May’s …
24th 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
Slowdown continues as supply shortages and virus wave persist 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 …
Productivity growth slowing further The 0.5% q/q rise in Japan’s Q2 GDP brought output closer to its pre-virus peak, with productivity up by 0.4% y/y. However, the bigger picture is that the pandemic has further slowed the sluggish productivity gains …
19th 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 …
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
Net migration worsened population decline Japan’s population fell by 726,342 (0.6%) last year. The figure would have been less alarming if not for negative net migration of 107,202, which is a trend we do not think will last. (See Chart 1.) Chart 1: Net …
12th August 2022
The extent to which neighbouring countries would be affected by an escalation of tensions between China and Taiwan would depend both on which sides they take and on the nature of restrictions imposed by the West and China. ASEAN countries are most reliant …
10th August 2022
With a record virus wave sweeping across the country and consumer confidence slumping, we’re slashing our forecast for Q3 consumption growth from 0.8% to 0.2%. While the government has refrained from declaring another state of emergency, spending was …
8th August 2022
