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Small business confidence was little changed in September and points to modest gains in industrial production. Meanwhile, the survey confirms that capacity shortages have intensified but suggests that price pressures remain fairly subdued. … Small …
27th September 2017
Japan’s ruling coalition should emerge victorious from the upcoming Lower House elections but “Abenomics” has long since run out of momentum and so there is little prospect of meaningful structural reform. The main economic implication is that the tax …
25th September 2017
The pick-up in the manufacturing PMI in September suggests that industrial activity continued to rise at a strong pace in the third quarter. However, the survey suggests that price pressures remain subdued. … Flash Manufacturing PMI …
Spending on research and development has been sluggish recently, but the recent rebound in corporate profits suggests it will start to recover before long. This would provide a boost to domestic demand and help improve the competitiveness of Japan’s …
22nd September 2017
The Bank of Japan left its upbeat assessment of economic conditions intact at today’s meeting. But inflation remains a long way below its projections, so further reductions in the Board’s forecasts next month are all but guaranteed. The upshot is that …
21st September 2017
Export volumes rose the most since 2010 in August which suggests that net trade should have started to support growth in the third quarter. … External Trade …
20th September 2017
With the opposition in disarray and support for the ruling coalition rebounding, the government may well retain its two-thirds majority in the Lower House if it called a snap election. The chances of another delay in the sales tax hike would decrease …
18th September 2017
With long-term interest rates at home anchored by the Bank of Japan, the key determinants of the value of the yen are both outside Japanese policymakers’ control: geopolitics and the actions of the US Fed. The yen barely moved following today's North …
15th September 2017
The Bank of Japan at its upcoming meeting will acknowledge that the economic recovery has accelerated. But policymakers will again leave policy settings unchanged and, with inflation set to continue undershooting the Board’s forecasts, tightening will …
14th September 2017
While the Bank of Japan didn’t reduce the pace of its bond purchases any further in August, they are much lower now than they were when Yield Curve Control was launched. Nonetheless, bond yields have remained anchored – indeed, ten-year government bond …
One reason put forward recently for the weakness of price pressures in Japan is that a boom in e-commerce is keeping a lid on prices. However, we find no evidence that this is having a major impact. … Is online retailing keeping price pressures …
13th September 2017
Bank lending rates remain very low and corporate profits have climbed to record highs. Companies are in rude financial health as a result and the number of bankruptcies has dropped to levels not seen in a generation. … Monetary Indicators Monitor …
12th September 2017
The rebound in machinery orders in July was overdue, but the figures have become increasingly less reliable as an indicator of capital spending. The bigger picture is that investment should continue to recover even if it slows this quarter. … Machinery …
11th September 2017
The experience of the last couple of weeks suggests that gold might be the better safe haven choice if war were to break out on the Korean peninsula. Nonetheless, on the evidence of past crises, the yen would still be likely to appreciate. … Would the yen …
8th September 2017
Part-time wages have been rising at a reasonable rate for a while but, with evidence now building the firms are finding it harder to hire sufficient full-time workers, a pick-up in broader wage growth is likely soon. The key question is whether it will be …
The EWS showed a rebound in manufacturing conditions which points to solid gains in industrial output. However, household conditions weakened which suggests that the recovery in consumer spending is now past its prime. … Economy Watchers Survey …
Revised data show that GDP growth last quarter wasn’t quite as strong as initially reported, and the early indications point to a slowdown in Q3. But the bigger picture is that the economy is experiencing one of the longest recoveries in recent history. … …
The fall in labour cash earnings in July was entirely due to a slump in bonus payments, whereas regular pay is holding up. Nonetheless, there is still a long way to go to reach the Bank of Japan’s 2% inflation target. … Labour Cash Earnings …
6th September 2017
South Korea is an important trading partner so Japan would not remain unscathed even if war in Korea didn’t involve Japan directly. And if North Korea fired missiles at Japan, potential losses could be huge. … How vulnerable would Japan be if war broke …
4th September 2017
We are lifting our GDP forecasts for both this year and next to reflect the strength of recent data. We are not making any changes to our inflation forecasts though, as price pressures still appear extremely weak. If we are right, the Bank of Japan will …
1st September 2017
While consumer confidence declined in August, it remains high by past standards. Households are upbeat about labour market prospects and their personal finances, which should support consumer spending. … Consumer Confidence (Aug. …
This report is only available as a PDF. Click to download. … Capital Spending (Q2) …
The renewed fall in industrial production and the slump in capital goods shipments in July suggest that growth slowed in the third quarter. … Industrial Production …
31st August 2017
Having appreciated against the dollar over recent weeks, the yen initially strengthened further when news of the North Korean missile launch broke yesterday. Despite this, we continue to expect the yen to reverse course before the end of the year. But …
30th August 2017
Small business confidence was little changed in August and points to small gains in industrial production. But despite mounting capacity shortages, price pressures remain contained . … Small Business Confidence …
Despite the continued fall in “core” household spending, the jump in retail sales in July suggests that consumer spending continued to expand at a strong pace in Q3. … Retail Sales …
We wouldn’t read too much into July’s slowdown in household spending as the data tend to understate private consumption. Meanwhile, strong job growth is lifting household incomes and providing a tailwind for consumer spending. … Unemployment & Household …
29th August 2017
Japan’s government is worried that a sharp increase in the number of part-time workers will feed into weaker growth in productivity in future and it has proposed a package of labour reforms in response. Unfortunately, the proposals fail to address the …
25th August 2017
A rebound in energy inflation helped to lift headline inflation to fresh highs in July. But with the peak in energy inflation nearing and underlying price pressures still subdued, we expect inflation to settle around 0.5% in coming months. … Consumer …
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 …
