Filtered by Subscriptions: Japan Economics Use setting Japan Economics
The unemployment rate edged up in January and with GDP growth set to remain soft, we think it will creep higher next year. … Labour Market (Jan.) & Capital Spending …
1st March 2019
The sharp falls in industrial production and retail sales in January suggest that the economy slowed sharply at the start of 2019. And the deterioration in business confidence means that a rapid rebound is not on the cards. … Industrial Production & …
28th February 2019
The export climate index fell to a three-year low in January and suggests that exports will barely grow at all this year. The monthly trade data have been even more downbeat as they showed export volumes falling at an annual rate of nearly 6% over the …
26th February 2019
The survey evidence suggests that the economy is losing momentum and we’ve lowered our GDP growth forecast for 2019 to 0.5%. If the economy records yet another quarter of falling output, we suspect PM Abe may delay the sales tax scheduled for October yet …
22nd February 2019
The drag from slumping fresh food inflation will subside soon but headline inflation will still hover around 0.5% over the coming months. … Consumer Prices …
The continued sharp fall in the manufacturing PMI in February adds to the evidence that Japan’s economy is losing steam rapidly and suggests that GDP growth will remain weak for now. … Flash Manufacturing PMI …
21st February 2019
The renewed widening of the trade deficit in January suggests that net trade remained a drag on GDP growth in the first quarter and we think that export growth will remain sluggish this year. … External Trade …
20th February 2019
Corporate investment has been a key driver of domestic demand in Japan recently, underpinned by healthy profits and the growing capacity constraints that resulted from a prolonged period of above-trend growth. But recent evidence suggests that firms are …
15th February 2019
Japan’s economy returned to growth in Q4 but its performance over the past year has been poor. Domestic demand will get a lift ahead of October’s sales tax hike but that sugar-high won’t be sustained. … GDP …
14th February 2019
This week’s “shunto” spring wage negotiations got underway against an inauspicious backdrop, with corrected official data showing that real wages didn’t rise at all last year. Next week, Japan’s zero interest rate policy, which was conceived as a last …
8th February 2019
Faced with a severe downturn, developed economies would exhaust their conventional monetary policy tools quickly. At first sight, Japan’s experience suggests that even the bold use of unconventional tools might not work. However, there are reasons why …
5th February 2019
The final few releases of December spending and output data have provided reassurance that Japan’s economy returned to growth in Q4. But the early signs for the current quarter are not at all encouraging. Meanwhile, the number of foreign workers continues …
1st February 2019
The sharp fall in December’s labour force and employment followed unusually strong gains in previous months and should not be a cause for concern. However, the unemployment rate may be close to a floor, so wage growth probably won’t rise further. … Labour …
The jump in industrial production in the fourth quarter points to a strong rebound in GDP. But the worsening of the business surveys suggests that a renewed slowdown at the start of this year is likely. … Industrial Production …
31st January 2019
The strong rise in December’s retail sales values suggests that private consumption growth in the fourth quarter could slightly exceed our expectations. And as consumers bring forward spending ahead of October’s sales tax hike, consumption should …
30th January 2019
A shocking set of export figures this week may have been worsened by specific troubles in the tech sector. But a deterioration in the global environment is likely to be an increasing headwind for the whole export sector this year. … Exports slump as tech …
25th January 2019
Combined with the recent fall in Reuters’ manufacturing Tankan, the slump in the manufacturing PMI in January suggests that the growth outlook for Japan has deteriorated. While we still expect domestic demand to pick up ahead of the sales tax hike, …
24th January 2019
Economic growth is set to slow after October’s sales tax hike while inflation will remain well below the Bank of Japan’s 2% target. But with high hurdles to additional policy easing, we think that the Bank will keep policy settings unchanged both this …
23rd January 2019
The slump in export volumes in December probably overstated the weakness in external demand. Even so, we expect export growth to slow this year. … External Trade …
Japanese households are more positive about current economic conditions than they have been for many years but they report still being highly price sensitive, and their worries about the outlook have spiked recently. All of this helps explain why, …
18th January 2019
The sharp fall in inflation in December in part reflects temporary factors that will reverse soon. But the bigger picture is that underlying price pressures will remain weak for the foreseeable future. … Consumer Prices …
The Bank is getting a bit more concerned about the impact of prolonged monetary easing on financial stability. But with economic activity and inflation set to fall short of its forecasts yet again, policy settings will have to remain loose for the …
16th January 2019
The stagnation in machinery orders in November suggests that business investment wasn’t the main driver of the likely rebound in Q4 GDP. But we still expect capital spending to rise at a strong pace this year. … Machinery Orders …
Japan’s 10-year government bond yield has been flirting with zero since the start of the year. Not so long ago, it was climbing towards the 0.2% ceiling of the “tolerance band” managed by the Bank of Japan. The outlook for domestic monetary policy hasn’t …
14th January 2019
It increasingly appears that Japan’s unemployment rate is bottoming out. Recent data suggest that wage growth is picking up, but the surge that some policymakers had hoped for at this point in the economic cycle remains elusive. The admission today of …
11th January 2019
The sales tax hike is likely to trigger a fall in output in Japan later this year but, thanks to counter-measures from the government, the downturn will be much less sharp than after similar tax increases in the past. Even so, price pressures will remain …
9th January 2019
The pick-up in wage growth in November has probably further to run as the unemployment rate declines ahead of the sales tax hike. But wages may not rise fast enough to meet the BoJ’s 2% inflation target. … Labour Cash Earnings …
The yield on 10-year Japanese Government Bonds turned negative again this week, for the first time since shortly after the “around zero” target was adopted in 2016. This may rattle some of the more hawkish people at the Bank of Japan but is unlikely to …
4th January 2019
Even though industrial production and retail sales fell rather sharply in November, both should have risen across the fourth quarter. Meanwhile, the unemployment rate hasn’t fallen any further over the past year and the floor may be higher than we had …
2nd January 2019
We expect the global economy to slow further next year which will be a headwind to trade. But the government has recognised the threat to domestic demand posed by next year’s sales tax hike and announced a number of measures to dampen the blow. The upshot …
21st December 2018
The recent slump in crude oil prices means that the slowdown in inflation in November has further to run. And underlying inflation may not climb much above 0.5% even if domestic demand strengthens ahead of next year’s sales tax hike. … Consumer Prices …
The Bank of Japan left interest rates unchanged today and Governor Kuroda’s dovish comments suggest that policy tightening remains a long way off. … Bank of Japan Meeting …
20th December 2018
The slump in export values in November suggests that growth in export volumes will continue to fall short of growth in import volumes in the fourth quarter. And the recent weakening in external demand suggests that net exports will remain a drag on GDP …
19th December 2018
Ten-year Japanese government bond yields this week dropped back to below their level when the Bank of Japan widened the tolerance band in July. The stealth tightening that some talked of at the time turned out to be nothing of the sort. … JGB yields …
14th December 2018
The Q4 Tankan survey was better than most had anticipated and adds to the evidence that the economy has turned the corner. Meanwhile, firms are reporting mounting difficulties finding staff which supports our view that the unemployment rate will fall to …
Recent comments by Governor Kuroda and analysis published by the Bank of Japan have again fuelled speculation that policy may be tightened soon. But with the economic expansion sputtering, the consumption tax clouding the outlook and inflation set to slow …
12th December 2018
The rise in machinery orders in October was weaker than anticipated, but orders still point to rising business investment in Q4. That suggests that the slump in Q3 GDP will be reversed in the fourth quarter. … Machinery Orders …
While the economy contracted even more than most had anticipated in the third quarter, we expect GDP growth to return to trend next year. … GDP (Q3 …
10th December 2018
One explanation for the persistent weakness of wage growth in Japan, despite the tightness of the labour market, is that employment growth has been skewed towards positions with low hours and low pay. But that doesn’t seem to be the case: the share of …
7th December 2018
The continued strength in base pay casts doubt on the Bank of Japan’s view that sampling distortions have overstated wage growth in recent months. And if the unemployment rate falls towards 2.0% over coming months as we expect, cost pressures will …
This week brought reassurance that the contraction in the economy in Q3 was largely due to one-off factors. The early signs are that there has been a strong rebound this quarter. In the week ahead, the government will be pushing to relax Japan’s …
30th November 2018
The surge in industrial production in October is a strong sign that the economy returned to growth in the fourth quarter. That suggests that October’s weakening in the labour market data won’t be sustained. In fact, we still expect the unemployment rate …
While doubts have been raised over whether the Japanese yen remains a safe haven in light of its poor performance in the summer, we think that the currency will retain this status for the foreseeable future. … The yen’s days as a safe haven are probably …
29th November 2018
The rebound in consumer spending in October suggests that private consumption returned to growth in the fourth quarter. That means that the contraction in GDP in the third quarter was just a blip. … Retail Sales …
Even though Japan’s “true” level of government debt is not as high as the commonly-watched gross measure suggests, it is still far higher than elsewhere. The ease with which Japan nonetheless copes with this might suggest that we should not worry too much …
27th November 2018
The slump in global oil prices will deliver a windfall to Japanese firms and households but it creates a headache for the Bank of Japan: lower energy prices will knock half a percentage point off headline inflation over the next few months. Meanwhile, …
23rd November 2018
Japan’s stock market has already fallen by 11% since its recent peak in early October, and we expect further declines in 2019 as equity prices tumble in the US and the yen strengthens. But this won’t create a major drag on Japan’s economy. … Further stock …
22nd November 2018
The jump in headline inflation in October reflected a boost from fresh food and energy prices that won’t last. However, we expect overall inflation to settle around 1% over coming months as price pressures strengthen ahead of next year’s sales tax hike. … …
The measures under consideration to offset the damage from next year’s sales tax hike may help to soften the blow if big enough. But they are unlikely to prevent a fall in domestic demand. … Plans to offset sales tax hike won’t stop spending …
20th November 2018
The continued widening of the trade deficit suggests that net trade remained a drag on GDP growth in the fourth quarter. And while the recent strength in import growth probably won’t be sustained, the outlook for external demand has deteriorated. … …
19th November 2018
