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Japan’s government has scaled back its public investment spending dramatically since the 1990s but it remains high by international standards. The quality of the country’s infrastructure is therefore unsurprisingly high, and the marginal benefits of …
18th August 2017
The recent acceleration in export values reflects a surge in export prices rather than stronger volumes. Nonetheless, export volumes will probably outpace import volumes this year so net exports will provide a sizeable boost to GDP growth … External trade …
17th August 2017
Japan’s economy recorded the sixth consecutive quarterly rise in GDP and is on track for the longest expansion since the turn of the century. However, we expect price pressures to strengthen only slowly. … GDP (Q2 …
14th August 2017
A slowdown in labour income forced households to reduce their savings in recent months. However, households have also become more upbeat about their personal finances. And with income growth likely to rebound in coming months, the outlook for consumer …
11th August 2017
Japan’s economy probably recorded the sixth quarter of uninterrupted GDP growth in Q2 and the outlook for the third quarter is positive. In fact, the economy remains on track to enjoy the longest expansion since the turn of the century. There are some …
While domestic loan growth has picked up in recent years, lending to foreign borrowers has risen much faster over the past decade. Japan is now the single-largest provider of cross-border lending. … Monetary Indicators Monitor …
10th August 2017
Machinery orders fell yet again in June and recorded the sharpest drop in a year last quarter. The key point though is that orders have become less reliable as a guide to business investment. … Machinery Orders …
Despite a drop in July, the Economy Watchers Survey still points to solid gains in consumer spending. … Economy Watchers Survey (Jul.) …
8th August 2017
Japan’s economy probably achieved a sixth consecutive quarter of growth in Q2 and early signs are that the run has continued into Q3. If so this would be the longest expansion since the turn of the century. Unfortunately, the experience from previous …
4th August 2017
The main reason for the fall in labour cash earnings in June was a slump in summer bonuses. What’s more, a renewed slowdown in working hours lowered base pay. But the surge in part-time pay suggests that wage growth will strengthen again soon. … Labour …
Comments today by BoJ Board Member Funo suggest that the Bank has given up on reaching its inflation target any time soon. Market expectations of policy tightening are likely to recede further as a result … Is the Bank of Japan giving up on its 2% …
2nd August 2017
Consumer confidence rebounded in July and suggests that private consumption will continue to recover. … Consumer Confidence (Jul.) …
Industrial production rose by nearly 2% last quarter which suggests that GDP growth accelerated. The outlook for the third quarter is positive. … Industrial Production …
31st July 2017
Abenomics appeared to run out of momentum well before a recent slump in Prime Minister Abe’s popularity put his political future in doubt. In particular, his departure would matter little for structural reform. Monetary policy should also continue along a …
28th July 2017
The rebound in retail sales and “core” household spending in June suggests that consumer spending rose at a solid pace last quarter. Meanwhile, inflation remains very low despite the continued tightening of the labour market. … Consumer Spending, Labour …
Small business confidence was little changed in July and still points to solid gains in industrial production. But even though firms continue to report severe staff shortages, the survey suggests that price pressures remain contained. … Small Business …
26th July 2017
We’re not much convinced by suggestions from the Bank of Japan that firms cutting back on the hours their employees work has contributed to the continued lack of inflation pressure. Very low and entrenched inflation expectations are a better explanation. …
25th July 2017
The second consecutive drop in the output index of the manufacturing PMI suggests that the sector is slowing. But the survey still points to faster increases in consumer prices. … Flash Manufacturing PMI …
24th July 2017
A year has passed since Japan’s government announced a huge fiscal stimulus. We argued at the time that the announcement would be followed by only a negligible increase in public spending. In fact, spending has fallen slightly since the announcement. Now …
21st July 2017
The Bank of Japan upgraded its assessment of the economy yet again at today’s meeting. But the Board’s inflation forecasts remain far too optimistic even after renewed downgrades. We reiterate our longstanding view that the Bank will not tighten policy …
20th July 2017
Export volumes probably fell slightly in Q2 while import volumes rose sharply so net trade turned into a drag on GDP growth. However, strong gains in industrial production still point to another solid rise in output. … External trade …
The popularity of the government has suffered severely recently and there is now a real chance that Mr Abe will be out of office before the next legislative elections. A change of prime minister could affect decisions over who should lead the Bank of …
19th July 2017
While inflation remains well below the Bank of Japan’s 2% target, Governor Kuroda deserves credit for a number of radical policy changes. His reappointment would therefore underline the government’s resolve in tackling deflation and repairing the public …
18th July 2017
The Bank of Japan will probably upgrade its assessment of the health of the economy at the upcoming meeting. But downward revisions to the Board’s inflation forecasts will underline that policy tightening remains a distant prospect. … Lower inflation …
17th July 2017
Japan is less welcoming to foreign direct investment than many other rich economies. But cuts to corporate tax rates, the prospect of additional free trade agreements and high profitability are making it more attractive. The recent pick-up in inward …
14th July 2017
Private sector debt is growing at the fastest pace on record as corporate debt issuance has surged. As a result, both household and corporate debt are now rising again relative to output. … Monetary Indicators Monitor …
US 10-year government bond yields have climbed to a two-month high in recent days and we expect them to rise further in coming months. By contrast, the Bank of Japan has underlined its determination to prevent 10-year JGB yields from rising much above …
11th July 2017
The Economy Watchers Survey continued to improve in June and points to strong gains in consumer spending. … Economy Watchers Survey …
10th July 2017
Machinery orders fell to a one-year low in May. But with capacity shortages intensifying and capital goods shipments rebounding, business investment should continue to expand. … Machinery Orders …
We now expect the government to delay the sales tax hike currently scheduled for October 2019 beyond 2020. While this would remove one obstacle to policy tightening by the Bank of Japan, the bigger picture is that price pressures will strengthen only …
7th July 2017
The acceleration in base pay in May largely reflects a rebound in working hours. While strong growth in part-time pay points to faster overall gains, there is still a long way to go before wage growth is strong enough to generate 2% inflation. … Labour …
The impact of the proposed tariff cuts in the EU/Japan free trade agreement should not be overstated. But the deal will also reduce non-tariff barriers and barriers to foreign direct investment which are key to enhance competition and boost Japan’s …
6th July 2017
While the ruling LDP’s severe defeat in local elections in Tokyo is not necessarily a bellwether to developments at the national level, we think that the government may respond with a larger supplementary budget for this year. What’s more, it now seems …
3rd July 2017
Despite a decline in June, consumer sentiment remains at elevated levels and household inflation expectations continue to recover. … Consumer Confidence …
The jump in the Tankan’s headline index for large manufacturers suggests that economic activity accelerated last quarter. Capacity shortages have intensified and manufacturers are reporting the smallest declines in output prices since 2008. … Tankan …
The ratio of public debt to GDP in Japan is more likely to rise than fall over the coming decade. But the situation is not as precarious as it may seem, given the government’s large holdings of financial assets and, in particular, the fact that the Bank …
30th June 2017
Today’s activity data suggest that industrial production expanded at a decent pace in the second quarter. However, consumer spending appears to have eased a touch last month, while price pressures remain subdued. … Ind. Prod., H’H Spending, Unempl. & …
We wouldn’t read too much into the fall in retail sales in May as sales remain stronger than they were throughout most of 2016 and the early part of this year. We’ve pencilled in another rise in private consumption this quarter. … Retail Sales …
29th June 2017
Small business confidence rose in June and suggests industrial production will continue to record modest gains. While firms reported severe staff shortages, price pressures remain subdued. … Small Business Confidence …
28th June 2017
Better education, an ageing workforce and easier job searching via the internet have reduced Japan’s structural jobless rate and kept a lid on wage growth in recent years. Even so, employers report severe staff shortages and the ratio of vacancies to …
23rd June 2017
Even though the manufacturing PMI fell rather sharply in June, it still points to a robust expansion in industrial output. What’s more, today’s survey suggests that price pressures continue to strengthen. … Flash Manufacturing PMI …
Export values didn’t rebound in May while import values edged higher which suggests that net exports turned into a drag on GDP growth in Q2. However, business surveys suggest that external demand remains healthy and we still expect net trade to provide …
19th June 2017
Recent gains in the hourly wages of part-time workers are an early indication that the tight labour market is finally creating some upward pressure on wages. That would be a welcome development for the Bank of Japan but far faster wage increases than seem …
16th June 2017
The Bank of Japan today turned more upbeat in its assessment of economic conditions, but Governor Kuroda remained cautious on the prospect of hitting the inflation target. With inflation set to undershoot the Bank’s projections by a wide margin, the …
Bank profits have continued to shrink as lenders’ net interest margins have declined. However, non-financial firms are benefitting from rock-bottom borrowing costs and corporate bankruptcies remain very low. … Monetary Indicators Monitor …
14th June 2017
The recovery in Japan’s economy since early last year has mostly been driven by a surge in exports, but Japanese consumers also seem to be joining the party. Consumer spending is on track for another strong increase this quarter, with spending on services …
13th June 2017
We wouldn’t read too much into the fall in machinery orders in April as the figures have not been a good guide to business investment recently. In fact, the rebound in capital goods shipments suggests that capital spending will continue to recover. … …
12th June 2017
The Bank of Japan’s JGB purchases of ¥4.3 trillion in May were the lowest since it stepped up purchases in October 2014. If overseas yields rebound in coming months as we expect, we will probably see a couple of months with larger purchases. But the …
9th June 2017
Today’s Economy Watchers Survey suggests that consumer spending will accelerate in coming months. By contrast, the survey points to broadly stagnant industrial output and a slowdown in job growth. … Economy Watchers Survey …
8th June 2017
The Bank of Japan will almost certainly leave policy settings unchanged at the upcoming meeting. And with inflation set to fall short of its forecasts for the current fiscal year, there is little chance of policy tightening anytime soon. … Board will have …
