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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 …
19th December 2014
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 …
The latest money supply figures have been encouraging, but we expect the slowdown in the housing market to weigh on loan growth in coming months. … Monetary Indicators Monitor …
12th November 2014
A snap election could have the virtue of giving the government a stronger mandate as it struggles to push ahead with structural reform. But it would not be a long-term positive if coupled with a delay in the tax hike currently scheduled for October 2015. …
11th November 2014
The sharp fall in the Economy Watchers Survey in October adds to other survey evidence pointing to a sluggish economic recovery. … Economy Watchers Survey …
Consumer confidence fell for a third straight month in October and remains barely higher than immediately after the sales tax hike. … Consumer Confidence …
The current account surplus climbed to a fresh high in September, and the weaker exchange rate should provide additional support in coming months. … Current Account …
Rather than harming the domestic manufacturing sector, outward investment by Japanese firms has boosted domestic activity and exports. Accordingly, the growth of offshore investment should not be blamed for the widening of Japan’s trade deficit. Our …
10th November 2014
Several factors determine how currency weakness affects firms in different export sectors. Over the past two years, the chemical industry and the car industry have seen the biggest gains in export values, but chemical firms have had to contend with a …
7th November 2014
The Nikkei has soared following the Bank of Japan’s decision to step up the pace of monetary easing. The yen has also weakened, which is good news for exporters. Less widely noticed is that, after a period of weakness after the tax hike, the recent data …
6th November 2014
The Bank of Japan’s decision on Friday to step up its pace of asset purchases has raised the chance that the sales tax will be increased again next year, but the decision is not yet a foregone conclusion. … Coordinated policy moves raise likelihood of …
5th November 2014
Wage growth slowed further in September, and will likely continue to fall short of inflation as the labour market is no longer tightening. … Labour Cash Earnings …
Despite a significant acceleration in the pace of JGB purchases, a shortage of available assets will not pose a constraint on QQE anytime soon. … Asset shortage no constraint on …
4th November 2014
The weakness of demand after the recent consumption tax hike pushed the Bank of Japan on Friday to ease policy and could prompt the government in coming weeks to cancel the second hike currently scheduled for next year. The prospects for household …
31st October 2014
It always looked likely that the Bank of Japan would be forced to step up its pace of easing but the change of tack has come sooner than the market (or we) had expected. Given the recent downward trend in inflation, the Bank could well end up increasing …
The renewed rise in unemployment last month shows that the labour market is no longer tightening, and we think it will start to slacken in earnest soon. Meanwhile, inflation continues to slow, and should moderate further due to lower energy prices. … …
The surge in manufacturing output in September suggests that the sector has finally turned the corner, but a strong recovery is not on the cards. … Industrial Production …
29th October 2014
The third decline in small business confidence in a row suggests that the economy is not quite as strong as the jump in the flash manufacturing PMI in October indicated. … Small Business Confidence …
28th October 2014
The jump in retail sales in September confirms that private consumption is recovering from the slump caused by the sales tax hike. But wages will have to rise faster for spending to increase further. … Retail Sales …
Just a few months ago, a sizeable number of analysts were expecting the Bank of Japan to provide more stimulus at the upcoming meeting, but only a few are still holding on to that view. We expect that the Bank will merely confirm at this week’s meeting …
27th October 2014
Recent comments by PM Abe suggest that next year’s scheduled hike in the sales tax might be delayed. Concerns about the economic impact of a further tax hike are understandable given the weakness of recent data. But the threat of a short-lived period of …
24th October 2014
The rebound in the flash manufacturing PMI in October indicates that industrial production should stop falling soon. … Flash Manufacturing PMI …
23rd October 2014
Japan's trade deficit edged higher in September, against expectations, but a weaker yen, falling commodity prices and the sluggishness of domestic demand should combine to deliver a narrower deficit over the months ahead. … External trade …
22nd October 2014
