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The greater tolerance being shown by Japan’s government towards inflation remaining below target simply reflects the fact that the oil price collapse has made hitting the target all but impossible in the near term. However, it does reduce pressure on the …
28th January 2015
The renewed fall in small business confidence this month underlines the fragility of the economic recovery. … Small Business Confidence …
27th January 2015
The rise in Japan’s exports to the US appears to reflect the strength of the recovery there rather than yen weakness. Indeed, evidence that the plunge in the yen is boosting export volumes remains elusive. … Impact of weaker yen on export volumes remains …
26th January 2015
The trade deficit fell to the lowest level since June 2013 in December, and is set to narrow further as lower energy prices are still not fully reflected in import costs. … External trade …
The plunge in crude oil prices since last summer will reduce the cost of Japan’s energy imports by around 2.5% of GDP in the near term. However, much of the windfall will be saved and the boost to demand over the course of the year will be much smaller – …
23rd January 2015
The flash manufacturing PMI was virtually unchanged in January, and still points to a solid recovery in the sector. … Flash Manufacturing PMI …
Apart from a minor tweak to its lending programmes, the Bank of Japan left policy settings unchanged today and signalled no concern about the impact of lower oil prices. The chances of additional stimulus being announced as early as April as we currently …
21st January 2015
The first rise in consumer confidence since July should be followed by a further improvement as falling energy prices improve households’ purchasing power. … Consumer Confidence …
19th January 2015
Despite surging tax revenues, we doubt that the government will reach its target of halving the primary deficit in the coming fiscal year. However, fading fiscal drag should at least ensure that the economy returns to growth. … Fading fiscal headwind to …
16th January 2015
While bank lending expanded at a record pace last year, leading indicators still point to a slowdown in loan growth in coming months. … Monetary Indicators Monitor …
15th January 2015
The rebound in machinery orders in November was weaker than expected, and business investment may have been little changed last quarter. Rising capacity shortages, however, suggest that corporate capital spending will soon start to recover. … Machinery …
The collapse in oil prices will force the Bank of Japan to tear up its inflation forecasts at the Policy Board meeting next week. It is also likely to set back efforts to lift inflation expectations and so, before too long, is likely to contribute to a …
14th January 2015
The strong rebound in the Economy Watchers Survey (EWS) in December stands in stark contrast with other business surveys which mostly weakened last month. … Economy Watchers Survey …
13th January 2015
The drop in the current account surplus in November was much smaller than expected, and should be followed by a renewed increase in coming months. … Current Account …
The unemployment rate has fallen below the level consistent with stable price pressure in recent months. It is unlikely to fall much further, as the pool of attractive job candidates is drying up. With the working age population in decline, the labour …
9th January 2015
The number of tourists visiting Japan reached a record high last year, and so did their aggregatespending. However, the volume of tourism expenditure remains small, and spillover effects from risingemployment or capital spending have proved elusive. … …
7th January 2015
Recent data suggest that the economy has finally shed the manacles of the sales tax hike. However, demographic headwinds are building, and real wages continue to fall despite the recent slowdown in inflation. We therefore still think that growth will be …
The recently-announced supplementary budget is small by past standards and does not significantlyalter the economic outlook. While the budget for the coming fiscal year foresees a fresh record high inpublic spending, it also factors in a surge in tax …
6th January 2015
Firms were predicting strong gains in industrial output around the turn of the year despite some weakness in the latest figures on spending and production. But with the labour force now shrinking and wage growth still subdued, we think that GDP growth …
5th January 2015
The decline in small business confidence to a seven-month low in December underlines that economic momentum in Japan remains sluggish. … Small Business Confidence …
24th December 2014
While the Bank of Japan left policy settings unchanged at today’s meeting, the recent plunge in the cost of energy will result in a further slowdown in price pressure and jeopardise the Bank’s efforts to lift inflation expectations. The upshot is that …
19th December 2014
Wage growth is set to remain sluggish next year and, with households also likely to be trying to rebuild their savings, we expect consumer spending to be subdued. In turn, this suggests that GDP growth in 2015 will be much weaker than many expect. Weak …
Bank lending is growing at the fastest pace in years, but a range of leading indicators point to a slowdown in coming months. … Monetary Indicators Monitor …
18th December 2014
The drop in the trade shortfall in November should be followed by a further narrowing in coming months as lower oil prices will reduce the import bill. … External trade …
17th December 2014
Policymakers will have been comforted by the jump in the Nikkei and the plunge in the yen since they stepped up the pace of monetary easing at the end of October. As such, they will almost certainly leave policy settings unchanged this week. However, the …
16th December 2014
The flash manufacturing PMI was broadly unchanged in December and suggests that the sector remains in recovery mode. … Flash Manufacturing PMI …
If the right policies were followed, we estimate that Japan’s potential growth rate could rise by around one percentage point. Measures to slow the shrinkage of the labour force and to reduce the regulatory burden are most pressing. Unfortunately, we fear …
15th December 2014
Today’s Tankan survey suggests that Japan’s economy stabilised in the fourth quarter, but a rapid recovery is not on the cards. … Tankan …
The decline in machinery orders in October follows four increases in a row and is therefore not necessarily a disaster. We think that business investment will start to rebound soon. … Machinery Orders …
11th December 2014
The renewed fall in consumer confidence last month shows that Abenomics provides little reason to cheer for Japan’s households. … Consumer Confidence …
10th December 2014
The deterioration in business conditions in today’s Business Outlook Survey is largely the result of seasonal patterns. In fact, the survey suggests that the economic recovery remains intact. … Business Outlook Survey …
The plunge in today’s Economy Watchers Survey suggests that Japan’s consumers remain in dire straits as the labour market seems to have softened. … Economy Watchers Survey …
8th December 2014
The second estimate of Q3 GDP showed that the economy shrank at an even faster pace than initially estimated. However, a return to growth in Q4 looks likely. … GDP (Q3 revised) & Current Account …
In terms of the boost to corporate and household spending power, Japan should be among the big winners from the fall in global energy prices. However, for policymakers, the resulting drag on inflation is likely to be a bigger concern. We expect consumer …
5th December 2014
After a period of uncertainty and disappointing data, which contributed to Prime Minister Abe’s decision to postpone the sales tax hike, the clouds have started to clear. There are good reasons to expect the initial estimate of Q3 GDP to be revised up …
3rd December 2014
Wage growth slowed in October, but may see a boost from higher winter bonuses by year-end. However, growth in base pay is unlikely to accelerate much further. … Labour Cash Earnings …
2nd December 2014
The Ministry of Finance’s survey on corporate finances points to an upward revision of non-residential investment in the second estimate of Q3 GDP. … Capital Expenditure …
1st December 2014
Japanese exporters commonly “price to market”, meaning they don’t allow the impact of exchange rate shifts to feed through fully into the prices paid by their foreign customers. This has become an increasingly popular explanation for the failure of export …
28th November 2014
Following a surge in industrial output and retail sales in September, we are not too worried about the small drops in October. Indeed, the labour market remains tight despite sluggish demand. However, price pressure continues to moderate, underlining the …
Despite a small rise this month, small business confidence remains subdued. However, shrinking spare capacity and higher input costs point to rising price pressure. … Small Business Confidence …
26th November 2014
The sharp fall in the yen over the last two years seems to have slowed the long-term rise in imports of manufactured goods relative to domestic production. However, even a further weakening of the exchange rate may not bring it to a complete halt. Export …
25th November 2014
To some, the continued fall in output last quarter is proof that Abenomics has failed. However, the economy has actually done fairly well over the past two years considering the strong demographic headwinds and the drag from this year’s sales tax hike. …
21st November 2014
While the flash manufacturing PMI edged lower in November, it still indicates that activity in the sector will continue to recover. … Flash Manufacturing PMI …
20th November 2014
Japan’s trade deficit shrank in October, and is set to narrow further due to a falling energy import bill. … External trade (Oct.) …
The Bank of Japan left policy settings unchanged today as widely expected. While a more upbeat economic outlook suggests that additional easing is not imminent, we think that it will still eventually be required. However, Governor Kuroda’s comments in …
19th November 2014
The direct impact of Prime Minister Abe’s decision to delay next year’s sales tax hike is to boost the outlook for growth and also for underlying inflation, though headline inflation will of course be lower. We still expect inflation to fall short of the …
18th November 2014
The surprising fall in Q3 GDP suggests that PM Abe will call off the planned increase in the sales tax next October. … GDP (Q3 Preliminary) …
17th November 2014
The question of whether to go ahead with next year’s sales tax hike will remain in the spotlight with Monday’s release of the Q3 GDP data, which Prime Minister Abe previously said would inform his decision. In our view, concerns about the economic damage …
14th November 2014
The Bank of Japan’s decision to step up the pace of asset purchases at the end-October meeting has resulted in a sharp fall in the yen, which should lift consumer prices in coming months. What’s more, the Bank has extended the timeframe for achieving the …
13th November 2014
Despite the fourth monthly rise in machinery orders in a row, we still expect a small decline in business investment last quarter. However, sentiment surveys suggest that capital expenditure will start to recover soon. … Machinery Orders …
