Friday September 28 2018
Japan Jobless Rate Below Forecasts in August
Statistics Japan | Rida | rida@tradingeconomics.com

The unemployment rate in Japan edged down to 2.4 percent in August of 2018 from 2.5 percent in the previous month and slightly below market expectations of 2.5 percent. Meanwhile, the jobs-to-applicants ratio stood at 1.63, the same as in July and the highest since January 1974.

The number of unemployed declined by 50 thousand from a month earlier to 1.67 million in August, while employment increased by 260 thousand to 66.62 million. The labour force rose by 220 thousand to 68.29 million and those detached from the labour force went down 240 thousand to 42.59 million.

Youth unemployment rate, measuring job-seekers between 15 and 24 years old, rose to 4.1 percent in August from 3.8 percent in the previous month.

A year earlier, the unemployment rate was higher at 2.8 percent.




Friday September 21 2018
Japan Inflation Rate Rises to 6-Month High in August
Statistics Japan | Rida | rida@tradingeconomics.com

Japan's consumer price inflation rose to 1.3 percent year-on-year in August 2018 from 0.9 percent in the previous month and above market consensus of 1.1 percent. It was the highest rate since February, due to a jump in prices of food and a faster rise in cost of transport.

In August, prices of food increased by 2.1 percent from a year earlier, way faster than a 1.4 percent rise in the prior month. It was the highest food inflation in six months, driven by prices of meals outside the home (1.1 percent vs 1 percent in July); cooked food (0.7 percent vs 0.5 percent); vegetables & seaweeds (11.3 percent vs 4.3 percent), of which fresh vegetables (15.5 percent vs 4.4 percent); cereals (1.9 percent vs 1.9 percent); fish & seafood (4.8 percent vs 3.9 percent), of which fresh fish & seafood (5.8 percent vs 4 percent); meats (0.1 percent vs 0.2 percent); dairy products & eggs (3.3 percent vs 3.1 percent); and fresh fruits (1 percent vs 4.3 percent).

Additional upward pressure came from: transportation & communication (2 percent vs 1.5 percent), culture & recreation (1.6 percent vs 0.6 percent); fuel, light & water charges (3.4 percent vs 3.1 percent), of which electricity (3.1 percent vs 2.5 percent); medical care (1.1 percent vs 2 percent); and education (0.5 percent vs 0.5 percent). Meanwhile, cost of miscellaneous was flat, following a 0.3 percent rise in July. At the same time, cost continued to fall for housing (-0.1 percent vs -0.1 percent); and furniture and household utensils (-1.1 percent vs -1.1 percent). Also, cost of clothes & footwear declined 0.1 percent, compared to a 0.3 percent rise in July.

Core inflation rate, which excludes fresh food, edged up to 0.9 percent from 0.8 percent in the previous two months and in line with expectations. It marked the highest figure since March.

On a monthly basis, consumer prices went up by 0.5 percent in August, after a 0.3 percent rise in July and reaching the highest monthly figure since November 2017.




Wednesday September 19 2018
BoJ Keeps Monetary Policy Steady
Bank of Japan | Rida | rida@tradingeconomics.com

The Bank of Japan left shorter-term interest rates unchanged at -0.1 percent on September 19th, and kept the target for the 10-year Japanese government bond yield at around zero, saying the economy will continue to expand modestly despite intensifying trade tensions. The bank also reiterated that it will keep interest rates extremely low for an extended period as inflation remains well below its 2 percent target.

With regard to the amount of JGBs to be purchased, the Bank will conduct purchases in a flexible manner so that their amount outstanding will increase at an annual pace of about 80 trillion yen. The BoJ also determined by an unanimous vote to purchase ETFs and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at an annual paces of about 6.0 trillion yen and about 90 billion yen, respectively. As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen, respectively.  

Excerpts from the Statement on Monetary Policy:

Japan's economy is expanding moderately, with a virtuous cycle from income to spending operating. Overseas economies have continued to grow firmly on the whole. In this situation, exports have been on an increasing trend. On the domestic demand side, business fixed investment has continued on an increasing trend with corporate profits and business sentiment maintaining their improving trend. Private consumption has been increasing moderately, albeit with fluctuations, against the background of steady improvement in the employment and income situation. Meanwhile, housing investment has been more or less flat. Public investment also has been more or less flat, remaining at a relatively high level. Reflecting these increases in demand both at home and abroad, industrial production has been on an increasing trend, and labor market conditions have continued to tighten steadily. Financial conditions are highly accommodative. On the price front, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) is in the range of 0.5-1.0 percent. Inflation expectations have been more or less unchanged.

With regard to the outlook, Japan's economy is likely to continue its moderate expansion. Domestic demand is likely to follow an uptrend, with a virtuous cycle from income to spending being maintained in both the corporate and household sectors, mainly against the background of highly accommodative financial conditions and the underpinnings through government spending. Exports are expected to continue their moderate increasing trend on the back of the firm growth in overseas economies. The year-on-year rate of change in the CPI is likely to increase gradually toward 2 percent, mainly on the back of the output gap remaining positive and medium- to long-term inflation expectations rising.

Risks to the outlook include the following: the U.S. macroeconomic policies and their impact on global financial markets; the consequences of protectionist moves and their effects; developments in emerging and commodity-exporting economies including the effects of the two aforementioned factors; negotiations on the United Kingdom's exit from the European Union (EU) and their effects; and geopolitical risks.





Wednesday September 19 2018
Japan Trade Balance Swings to Deficit in August
Ministry of Finance | Rida | rida@tradingeconomics.com

Japan posted a trade deficit of JPY 444.6 billion in August of 2018, compared to a JPY 96.8 billion surplus in the same month a year ago and slightly below market expectations of a JPY 468.7 billion gap. Imports jumped 15.4 percent and exports increased at a softer 6.6 percent.

Imports climbed 15.4 percent from a year earlier to JPY 7.1 trillion in August, beating market consensus of a 14.9 percent growth and following a 14.6 percent increase in July. Purchases of mineral fuels surged 46.3 percent, boosted by petroleum (59.6 percent), LNG (28.6 percent) and coal (35.3 percent); and those of electrical machinery went up 7 percent, driven by telephony, telegraphy (25.5 percent) and audio and visual apparatus (11.3 percent). In addition, imports increased for: machinery (12.9 percent), led by power generating machine (12.3 percent) and computers and units (9.9 percent); chemicals (5.2 percent), namely medical products (6.4 percent); manufactured goods (6.7 percent), of which non-ferrous metals (14.3 percent) and manufactures of metals (9 percent); and others (4.6 percent), of which clothing and accessories (5.1 percent), and scientific, optical instruments (2.6 percent).

Among major trading partners, imports rose from Asia (7.1 percent), mainly from China (5.9 percent), South Korea (6.5 percent), Taiwan (1.6 percent), Thailand (6.6 percent) Indonesia (18.7 percent) and Vietnam (17.1 percent). Also, imports grew from the EU (6.5 percent), mainly from the UK (41 percent), the Netherlands (33.5 percent), Italy (3.5 percent) and France (3.5 percent); the US (21.5 percent); Australia (24.2 percent); and the Middle East (56.4 percent), mainly from the UAE (74 percent), Saudi Arabia (43.8 percent) and Qatar (69.8 percent).

Exports increased at a softer 6.6 percent to JPY 6.7 trillion in August, beating expectations of a 5.6 percent gain and following a 3.9 percent growth a month earlier. Sales of transport equipment advanced 8.4 percent, led by cars (5.6 percent), and those of machinery went up 9.8 percent, boosted by semicon machinery etc (34.3 percent) and power generating machine (16.8 percent). Also, exports rose for electrical machinery (5.6 percent), of which semiconductors (4.2 percent) and IC (4.4 percent); manufactured goods (10.5 percent), namely iron and steel products (13.4 percent) and non-ferrous metals (13.7 percent); and chemicals (15.1 percent), of which plastic materials (5.4 percent) and organic chemicals (7.8 percent). On the other hand, exports of others declined by 8.4 percent, due to sales of scientific, optical instruments (-2.4 percent).

Sales to Asia rose 6.8 percent, mainly to China (12.1 percent), Taiwan (11.4 percent), Thailand (9.4 percent), Vietnam (18 percent) and Indonesia (16.8 percent), while those to South Korea (-3.1 percent) and Singapore (-16.4 percent) fell. In addition, outbound shipments increased to the EU (7.1 percent), mainly to Germany (10.8 percent) and the UK (2 percent); and the US (5.3 percent).

Considering January to August, Japan recorded a trade gap of JPY 73.8 billion, compared to a surplus of JPY 1.5 trillion in the same period the preceding year. 




Monday September 10 2018
Japan Q2 GDP Growth Revised Higher to 0.7%
Cabinet Office l Rida | rida@tradingeconomics.com

The Japanese economy advanced 0.7 percent quarter-on-quarter in the June quarter of 2018, stronger than the preliminary figure of a 0.5 percent growth and after a 0.2 percent contraction in the previous period. It was the highest growth rate since the first quarter of 2017, boosted by an upward revision of business spending and a strong rebound in private consumption.

In the second quarter, the largest  contribution to GDP growth came from private demand (0.8 percentage points), of which private consumption (0.4 percentage points) and capital expenditure (0.5 percent). At the same time, public demand and changes in inventories were neutral, while net exports had a negative contribution of 0.1 percentage points.

Private demand increased by 1.1 percent, higher than the preliminary data of a 0.7 percent rise and after declining 0.4 percent in the first quarter of the year. Private consumption went up 0.7 percent, the same as in the preliminary estimate, which was a rebound from a 0.2 percent fall in the prior quarter and matching expectations. In addition, capital expenditure grew by 3.1 percent, far stronger than the preliminary figure of 1.3 percent, which was way faster than a 0.7 percent rise in the March quarter and  beating estimates of 2.8 percent. It was the steepest increase in business spending since the first quarter 2015.

Meantime, public demand went up 0.2 percent, unchanged from the preliminary data, but reversing from a 0.1 percent decline in the March quarter. The rebound was mainly supported by a pick-up in government consumption (0.2 percent vs flat reading in Q1), while public investment showed no growth  (vs -0.4 percent in Q1).
Exports of goods and services grew by 0.2 percent, the same as in the preliminary figure but much softer than a 0.6 percent growth in the first quarter. It marked the weakest reading since the June quarter 2017. Meantime, imports grew by 0.9 percent, slightly lower than the preliminary figure of a 1 percent gain and after a 0.2 percent rise in the March quarter.

On an annualized basis, the economy grew by 3 percent, much faster than the preliminary estimate of a 1.9 percent expansion and easily beating consensus of a 2.6 percent growth. It followed a 0.9 percent contraction in the March quarter and marking the highest annualized figure since the first quarter 2016, due to strength in business spending and household consumption.




Friday August 31 2018
Japan Jobless Rate Rises to 3-Month High in July
Statistics Japan l Rida | rida@tradingeconomics.com

The unemployment rate in Japan edged up to 2.5 percent in July of 2018 from 2.4 percent in the previous month and slightly above market estimates of 2.4 percent. It was the highest jobless rate since April. Meanwhile, the jobs-to-applicants ratio inched higher to 1.63 from 1.62 in June while markets had expected an unchanged figure of 1.62. It marked the highest level since January 1974.

Compared to the preceding month, there were 1.72 million unemployed persons in July, 60 thousand more than in June. Employment increased by 40 thousand to 66.36 million, after a decrease of 410 thousand in a month earlier. The labour force went up by 80 thousand to 68.07 million while those detached from the labour force went down 170 thousand to 42.8 million.

Among people aged 15 to 24 years old, the jobless rate was unchanged at 3.8 percent.

A year earlier, unemployment was higher at 2.8 percent.


Friday August 24 2018
Japan Inflation Rate Unexpectedly Climbs to 4-Month High
Statistics Japan | Rida | rida@tradingeconomics.com

Japan's consumer price inflation rose to 0.9 percent year-on-year in July 2018 from 0.7 percent in the previous month and far above market consensus of 0.4 percent. It was the highest rate since March, mainly due to a jump in food prices.

Prices of food increased by 1.4 percent from a year earlier in July, much faster than a 0.4 percent rise in June. It was the highest food inflation in four months, mainly boosted by prices of meals outside the home (1 percent vs 0.9 percent in June); cooked food (0.5 percent vs 0.3 percent); vegetables & seaweeds (4.3 percent vs -1.1 percent), of which fresh vegetables (4.4 percent vs -4 percent); cereals (1.9 percent vs 1.6 percent); fish & seafood (3.9 percent vs 3.2 percent), of which fresh fish & seafood (4 percent vs 2.7 percent); meats (0.2 percent vs 0.1 percent); dairy products & eggs (3.1 percent vs 2.9 percent); and fresh fruits (4.6 percent vs -1.3 percent).

Additional upward pressure came from: transportation & communication (1.5 percent vs 1.4 percent), culture & recreation (0.6 percent vs 0.8 percent); fuel, light & water charges (3.1 percent vs 3.3 percent), of which electricity (2.5 percent vs 3.1 percent); miscellaneous (0.3 percent vs 0.4 percent); medical care (2 percent, the same as in June); clothes & footwear (0.3 percent vs flat reading); and education (0.5 percent, the same as in June). At the same time, cost continued to fall for housing (-0.1 percent, the same as in June); and furniture and household utensils (-1.1 percent vs -1 percent).

Core inflation rate, which excludes fresh food, came in at 0.8 percent in July, unchanged from the previous month's three-month high but slightly below estimates of 0.9 percent.

On a monthly basis, consumer prices went up by 0.3 percent in July, after a 0.1 percent rise in June and reaching the highest monthly figure since January.


Thursday August 16 2018
Japan Trade Balance Swings to Deficit
Mario | mario@tradingeconomics.com

Japan recorded a trade deficit of JPY 231 billion in July of 2018, compared to a JPY 407 billion surplus in the same month a year ago and to market consensus of a JPY 50 billion gap.

Exports increased by 3.9 percent from a year earlier to JPY 6.75 trillion in July, down from a 6.7 percent rise in June and below expectations of a 6.3 percent gain. Export growth was observed for: machinery (4.8 percent), namely power generating machine (3.6 percent) and semicon machinery etc (13.7 percent); electrical machinery (7 percent), namely semiconductors (8 percent) and IC (9.7 percent); chemicals (10.9 percent); and manufactured goods (7.1 percent), namely iron and steel products (11.2 percent). In contrast, exports of transport equipment declined 4.0 percent, triggered by a 2.6 percent decline in car sales and a 29.8 percent drop in ships.

By country, exports rose to China (11.9 percent), Taiwan (4.4 percent), Hong Kong (6.1 percent), Thailand (0.6 percent), Singapore (3.8 percent) and the EU (6.4 percent), in particular Germany (5.2 percent) and the UK (7.6 percent). In contrast, exports to the United States fell 5.2 percent, marking the second straight drop in 18 months amid global trade tensions. Exports also declined to South Korea (-1.9 percent).

Meantime, imports jumped 14.6 percent to JPY 6.98 trillion, up from a 2.6 percent growth in June and slightly above market consensus of a 14.4 percent rise. July's climb was boosted by increases in purchases of: mineral fuels (30.7 percent), of which petroleum (40.3 percent), LNG (16.7 percent) and coal (13.3 percent); electrical machinery (7 percent), of which semiconductors (4 percent) and telephony, telegraphy (8.7 percent); others (8.4 percent), of which clothing and accessories (13.1 percent); chemicals (28.8 percent); machinery (6.6 percent); manufactured goods (11.9 percent), of which nonferrous metals (23.9 percent); and foodstuff (4.9 percent).

By country, imports rose from China (6.7 percent), the US (11 percent), the EU (29.1 percent) in particular Germany (29.2 percent) and France (26.6 percent), the Middle East (38.6 percent) in particular Saudi Arabia (21.9 percent) and the UAE (48.4 percent), South Korea (12.5 percent), Taiwan (4.5 percent) and Thailand (8.9 percent).


Friday August 10 2018
Japan Economy Returns to Solid Growth in Q2
Cabinet Office | Rida | rida@tradingeconomics.com

The Japanese economy advanced 0.5 percent on quarter in the three months to June 2018, after a 0.2 percent contraction in the previous period and beating market consensus of a 0.3 percent growth, preliminary estimates showed. It was the highest growth rate since the third quarter of 2017, boosted by a strong rebound in household consumption and a faster rise in business spending.

In the three months to June, positive contribution to GDP growth came from private demand (0.5 percentage points), of which private consumption (0.4 percentage points) and capital expenditure (0.2 percent). At the same time, public demand and changes in inventories were neutral, while net exports had a negative contribution of 0.1 percentage points.

Private demand increased by 0.7 percent in the second quarter, reversing from a 0.4 percent fall in the first quarter, driven by a rebound in private consumption (0.7 percent vs -0.2 percent in Q1) which was way above expectations of a 0.2 percent rise. Also, capital expenditure expanded by 1.3 percent, much faster than a 0.5 percent growth in Q1 and far above forecasts of a 0.6 percent gain. It was the steepest increase in business spending since the first quarter 2015.

Meantime, public demand went up 0.2 percent, compared to a 0.1 percent contraction in the first quarter. The rebound was supported by a pick-up in government consumption (0.2 percent vs flat reading in Q1), while public investment declined 0.1 percent (vs -0.4 percent in Q1).

Exports of goods and services grew by 0.2 percent (vs 0.6 percent in Q1), the slowest increase since the second quarter of 2017. Meantime, imports climbed 1 percent (vs 0.2 percent in Q1).

Japan's economy expanded at an annualised rate of 1.9 percent in the second quarter of 2018, bouncing back from an upwardly revised 0.9 percent contraction in the previous period and beating market expectations of 1.4 percent growth. The expansion was mainly driven by strong household and business spending.



Tuesday July 31 2018
BoJ Introduces More Policy Flexibility
Bank of Japan l Rida | rida@tradingeconomics.com

The Bank of Japan left its key short-term interest rate unchanged at -0.1 percent and vowed to keep rates extremely low for an extended period of time at its July 2018 meeting. The central bank reinforced its commitment to continue with powerful monetary easing, defying speculations of a tight regime. At the same time, the central bank kept its 10-year government bond yield target at around 0 percent but said the yield could fluctuate depending on economic and price developments. The 10-year yield will now rise up to around 0.20 percent, from around 0.10 percent before. Policymakers also opted for flexible bond buying, saying they may increase or decrease the amount of purchases depending on market conditions.

The central bank intended to maintain the current extremely low levels of short-and long-term iterest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including the effects of the consumption tax hikes scheduled to take place in October 2019.

With regard to the amount of JGBs to be purchased, the BoJ determined by an unanimous vote to purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at an annual paces of about JPY 6 trillion and about JPY 90 billion, respectively. With a view to lowering risk premia of asset prices in an appropriate manner, tha bank may increase or decrease the amount of purchase depending on market conditions. As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen respectively.  

In addition, under the condition that yield curve control can be conducted appropriately, the bank will reduce the size of the Policy-Rate Balance in financial institutions' current account balances at the bank. This balance is calculated assuming that arbitrage transactions take place in full among financial institutions. Regarding the amount of each ETF to be purchased, the bank will revise the purchase amount of each ETF and increase that ETF's which track the Tokyo Stock Price Index (TOPIX).

Meanwhile in a quarterly review of the central bank's forecasts, the BOJ said medium-to-long-term inflation expectations are projected to rise gradually as firms' stance gradually shifts toward further raising wages and prices with the output gap remaining positive. As a consequence, the year-on-year rate of change in the CPI is likely to increase gradually toward 2 percent, although it will take more time than expected. For fiscal 2018, core CPI is projected to rise by 1.1 percent, down from an earlier forecast of 1.3 percent. At the same time, the economy is expected to expand by 1.5 percent, more or less unchanged from  a 1.6 percent expansion in the previous estimate.

Excerpts from the Outlook for Economic Activity and Prices:

Japan's economy is likely to continue at a pace above its potential in fiscal 2018, mainly against the background of highly accommmodative financial conditions and the underpinning through government spending, with overseas economied continuing to grow firmly. From fuscal 2019 through fiscal 2010, the economy is expected to continue on an expanding trend, partly supported by external demand, although the growth pace is projected to decelerate due to a cyclical slowdown in business fixed investment and the effects of the scheduled consumption tax hike.

With regard to the risk balance, upside and downside risks to economic activity are generally balanced in fiscal 2018, but skewed to the downside for fiscal 2019 onward.