Thursday September 21 2017
BoJ Leaves Monetary Policy Unchanged
Bank of Japan l Rida Husna | rida@tradingeconomics.com

The Bank of Japan left its key short-term interest rate unchanged at -0.1 percent at its September 2017 meeting, hours after the Federal Reserve announced a plan to begin selling some of the assets on its balance sheet beginning in October. Policymakers also kept its 10-years government bond yield target around zero percent and maintained its upbeat view on private consumption and overseas economies.

With regard to the amount of JGBs to be purchased, the Bank will conduct buying at more or less the current pace -- an annual pace of increase of about 80 trillion yen.

The BoJ also determined by a 8-1 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 6.0 trillion and about JPY 90 billion, 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.  

New board member Goushi Kataoka dissented to the BOJ's decision to keep its interest rate targets, saying current monetary policy was insufficient to bring inflation to 2 percent during fiscal 2019.

Excerpts from the Statement by the Bank of Japan:

Japan's economy is expanding moderately. Overseas economies have continued to grow at moderate pace on the whole. In this situation, exports have been on an increasing trend. On the domestic demand side, business fixed investment has been on a moderate increasing trend with corporate profits improving.  Private consumption has increased its resilience against the background of steady improvement in the employment and income situation. Meanwhile, public investment have been increasing and housing investment has been more or less flat. 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 tighthen 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 around 0.5 percent. Inflation expectations have remained in a weakening phase.

With regard to the outlook, Japan's economy is likely to turn to a moderate expansion. Domestic demand is likely to follow an uptrend, with a virtuous cycle from income to spending being maintained in both the household and corporate sectors, on the back of highly accommodative financial conditions and fiscal spending through the government's large scale stimulus measures. Exports are expected to continue their moderate increasing trend on the back of an improvement in overseas economies. The year-on-year rate of change in the CPI is likely to continue on an uptrend and increase toward 2 percent, mainly on the back of an improvement in the output gap and a rise in medium-to long-term inflation expectations.

Risks to the outlook include the following: the US economy policies and the impact on global financial markets; developments in emerging and commodity-exporting economies; negotiations on the United Kingdom's exit from the European Union (EU) and their efects; prospects regarding the European debt problem, including the financial sector, and geopolitical risks.

The Bank will continue with "Quantitative and Qualitative Monetary Easing (QQE) with a Negative Interest Rate," aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner. The Bank will make policy adjustments as appropriate, taking account of developments in economc activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target.




Wednesday September 20 2017
Japan Trade Balance Swings to Surplus in August
Ministry of Finance, Japan l Chusnul Ch Manan| chusnul@tradingeconomics.com

Japan's trade balance swung to a JPY 113.64 billion surplus in August of 2017 from JPY 34.62 billion deficit in the same month a year earlier and above market consensus of a surplus of JPY 93.9 billion. Exports rose 18.1 percent from a year earlier to JPY 6,278 billion while imports increased by 15.2 percent to JPY 6,164.4 billion.

In August, exports rose 18.1 percent from the previous year to JPY 6,278 billion and above expectations of a 14.7 percent gain. It was the ninth straight month of increase in outbound shipments and the fastest since November 2013, as all categories lifted. Sales of transport equipment grew by 13.9 percent, supported by motor vehicles (14.5 percent), parts of motor vehicles (18.1 percent), and motorcycles, autocycles (30.9 percent). Also, outbound shipments of machinery went up 18.5 percent, mainly boosted by power generating machine (19.7 percent), computers and units  (18.6 percent), and parts of computers (19 percent). Sales of manufactured goods increased by 11.7 percent, led by iron and steel products (13.8 percent). In addition, exports of electrical machinery rose 16.9 percent, mainly driven by semiconductors (19.1 percent) and IC (23.5 percent). Sales of chemicals went up 20 percent, boosted by organic chemicals (24.8 percent), medical products (17 percent), and plastic materials (15.7 percent). Exports of others rose 26.3 percent, driven by scientific, optical instruments (29.4 percent). In addition, outbound shipments of foodstuff rose 18.1 percent and those of raw materials gained 33.1 percent.
 
Among major trading partners, exports rose to China (19.9 percent); the US (21.8 percent); the EU (13.7 percent), of which Germany (13.3 percent); Hong Kong (25.8 percent), and South Korea (17.1 percent).
 
Imports increased by 15.2 percent from a year earlier to JPY 6,164.4 billion, and above market expectations of a 11.8 percent gain. Purchases rose for all categories: mineral fuels (24.2 percent), of which petroleum (14.3 percent); electrical machinery (10.7 percent); chemicals (6.3 percent); machinery (23.8 percent); others (6.9 percent), of which scientific, optical instrument (12.2 percent); foodstuff (17.6 percent); manufactured goods (15.9 percent), raw materials (25.5 percent), and tansport equipment (8 percent), boosted by motor vehicles (17,9 percent) and parts of motor vehicles (19.8 percent).
 
Among major trading partners, imports rose from China (11 percent); the US (5.7 percent); Taiwan (4.2 percent); South Korea (16.7 percent); the EU (12.3 percent), of which Germany (23.8 percent), and Australia (51.8 percent).
 
 
 
 
 




Friday September 08 2017
Japan Q2 GDP Growth Revised Down to 0.6%
Cabinet Office l Rida Husna | rida@tradingeconomics.com

The Japanese economy advanced 0.6 percent quarter-on-quarter in the June quarter of 2017, below preliminary estimates of a 1.0 percent expansion. Business spending grew much slower than expected and private consumption rose slightly less than anticipated.

Despite the downward revision, Japan has maintained a sixth straight quarter of growth, the longest run of economic expansion since 2006.

In the three months to June, household consumption added 0.5 percentage points to growth, private non-residential investment/business spending contributed 0.1 percentage points and government spending added 0.1 percentage points. In contrast, net trade subtracted 0.3 percentage points from the growth. Meantime, changes in private inventories made no contribution to growth.

Compared to the first quarter, private consumption went up 0.8 percent (less than a 0.9 percent rise in the preliminary estimate and compared to a 0.4 percent increase in the three months to March).

Government expenditure rose 0.4 percent (compared to a 0.3 percent gain in the preliminary estimate and following a 0.1 percent contraction in the prior quarter). Public investments jumped 6.0 percent (faster than a 5.1 percent rise in the preliminary estimate and after a 0.4 percent rise in Q1).

Private non-residential investment increased by 0.5 percent (much weaker than the preliminary figures of a 2.4 percent gain but at the same pace as in the preceding quarter). Meanwhile, private residential investment expanded 1.3 percent (compared to the preliminary estimates of a 1.5 percent increase and following a 1.0 percent growth in the March quarter).

Exports of goods and services declined by 0.5 percent (the same as in the preliminary figures and after increasing 1.9 percent in Q1; imports rose 1.4 percent (unchanged from the preliminary estimates and following a 1.3 percent rise in Q1).

On an annualised basis, the economy grew by 2.5 percent, much weaker than preliminary estimates of a 4.0 percent expansion.




Monday August 28 2017
Japan Jobless Rate Steady at 2.8% In July
Charles | charles@tradingeconomics.com

The unemployment rate in Japan remained at it's 23-year low of 2.8 percent in July of 2017, unchanged from the previous month and consistent with the market consensus. Meanwhile, the jobs-to-applicants ratio was 1.52, up from 1.51 in the previous period and in-line with expectations to mark the highest level since February 1974.

Compared to the previous month, there were 1.9 million unemployed persons, 10 thousand more than in June. Employment increased by 140 thousand to 65.45 million, after rising by 120 thousand in June. The labour force increased by 150 thousand to 67.36 million while those detached from the labour force went down by 60 thousand to 43.67 million.

 Among people aged 15 to 24 years old, the jobless rate rose to 4.9 percent from 4.6 percent in June.

 A year earlier, unemployment was higher at 3 percent.




Friday August 25 2017
Japan Inflation Rate Steady for 4th Month at 0.4%
Statistics Japan | Rida Husna | rida@tradingeconomics.com

Consumer prices in Japan rose 0.4 percent year-on-year in July of 2017, the same as in the prior three months and matching market consensus. Prices of food rose at a slower pace while cost of transport rebounded and cost of housing continued to decline.

In July, prices of food increased by 0.6 percent from a year earlier, following a 0.8 percent rise in June, namely, fresh food (-1.1 percent from 0.5 percent), fish and seafood (4.9 percent from 5.5 percent) and fresh fruits (0.9 percent from 1.3 percent). In addition, prices fell further for fresh vegetables (-6.6 percent from -4.0 percent).

Meantime, prices increased more than in a month earlier for fuel, light and water charges (4.3 percent from 3.5 percent in June), mainly due to higher electricity cost (6.1 percent from 4.9 percent). Also, cost rebounded for: transport & communication (0.1 percent from -0.1 percent) and miscellaneous goods and services (0.1 percent from -0.1 percent). 

Cost rose less for medical care (0.1 percent from 0.3 percent) and was flat for clothing and footwear (from 0.2 percent) and culture and recreation (from -0.1 percent). Inflation was steady for education (0.4 percent). 

On the other hand, cost fell for: housing (-0.2 percent from -0.2 percent) and furniture and household utensils (-0.4 percent from -0.4 percent), 

Core consumer prices, which exclude fresh food, edged up to 0.5 percent on the year from 0.4 percent in June and in line with market estimates. It was the highest level since March of 2015.

On a monthly basis, consumer prices were flat, the same as in the preceding two months.

In Tokyo, consumer prices rose 0.5 percent in August, compared to a 0.1 percent rise in a month earlier while markets estimated a 0.3 percent increase. Core consumer prices, which exclude fresh food, increased 0.4 percent and above consensus of a 0.2 percent rise.




Thursday August 17 2017
Japan Trade Surplus Narrows 17% in July
Ministry of Finance l Rida Husna | rida@tradingeconomics.com

Japan's trade surplus fell 17.0 percent to JPY 418.77 billion in July of 2017 from JPY 504.53 billion in the same month a year earlier but above market consensus of a surplus of JPY 392.0 billion. Exports rose 13.4 percent from a year earlier to JPY 6,494.89 billion while imports increased by 16.3 percent to JPY 6,076.19 billion.

In July, exports rose 13.4 percent from the previous year to JPY 6,494.9 billion in July 2017, just below expectations of a 13.6 percent gain. It was the eighth straight month of increase in exports as all categories lifted. Sales of transport equipment grew by 11.4 percent, supported by motor vehicles (6.0 percent) and parts of motor vehicles (15.8 percent). Also, outbound shipments of machinery went up 13.7 percent, boosted by power generating machine (20.9 percent) and semicon machinery (11.2 percent). Sales of manufactured goods increased by 9.0 percent, led by iron and steel products (5.3 percent). In addition, exports of electrical machinery rose 11.7 percent, mainly driven by semiconductors (11.8 percent) and IC (15.7 percent). Sales of chemicals went up 14.9 percent, boosted by organic chemicals (14.6 percent) and plastic materials (10.5 percent). Exports of others rose 21.2 percent, driven by scientific, optical instruments (20.1 percent). In addition, outbound shipments of foodstuff rose 3.8 percent and those of raw materials gained 20.5 percent.

Among major trading partners, exports rose to China (17.6 percent); the US (11.5 percent); the EU (8.3 percent), of which Germany (12.2 percent); South Korea (16.8 percent) and Taiwan (5.5 percent). 

Imports increased by 16.3 percent from a year earlier to JPY 6,076.1 billion, albeit short of market expectations of a 17 percent gain. Purchases rose for most categories: mineral fuels (25.9 percent), of which petroleum (7.9 percent); electrical machinery (17.2 percent); chemicals (5.1 percent); machinery (29.0 percent); others (5.4 percent), of which scientific, optical instrument (21.4 percent); foodstuff (12.8 percent); manufactured goods (22.2 percent) and raw materials (30.7 percent). In contrast, imports fell for transport equipment (-6.5 percent), mainly due to motor vehicles (-22.8 percent) and aircraft (-12.4 percent).

Among major trading partners, imports rose from China (13.1 percent); the US (13.9 percent); Taiwan (22.4 percent); South Korea (21.9 percent); the EU (3.1 percent), of which Germany (7.0 percent) and Australia (36.1 percent).


Monday August 14 2017
Japan Q2 GDP Growth Strongest in Over 2 Years
Cabinet Office l Rida Husna | rida@tradingeconomics.com

The Japanese economy advanced 1.0 percent on quarter in the three months to June of 2017, following an upwardly revised 0.4 percent expansion in the previous period and beating market consensus of 0.6 percent, the preliminary estimate showed. It was the strongest growth rate since the first quarter of 2015, boosted by strong domestic demand.

The positive contribution to GDP came from household consumption (0.5 percentage points), capital expenditure (0.4 percentage points) and government spending (0.1 percentage points). In contrast, net trade subtracted 0.3 percentage points from the growth.

Private consumption increased by 0.9 percent, the most in over three years, after rising by an upwardly revised 0.4 percent in the prior quarter.

Government expenditure rebounded 0.3 percent, following a 0.1 percent contraction in the prior three months. Meanwhile, public investments jumped 5.1 percent, much faster than a 0.6 percent rise in Q1.

Business spending spiked 2.4 percent, following an upwardly revised 0.9 percent rise in the March quarter. It was the fastest growth in business investment since January-March 2014. Meantime, private residential investment grew by 1.5 percent, faster than a 0.9 percent increase in Q1.

Exports of goods and services declined by 0.5 percent after increasing 1.9 percent in Q1; while imports rose 1.4 percent, faster than a 1.3 percent gain in the previous three-month period.

On an annualised basis, the GDP expanded 4.0 percent, compared to an upwardly revised 1.5 percent growth in the first quarter and beating market consensus of 2.5 percent. The Japanese economy has now expanded in six straight quarters, the first such streak in more than three years.



Friday July 28 2017
Japan Jobless Rate Retreats To 2.8% In June
Statsitics Japan | Charles | charles@tradingeconomics.com

The unemployment rate in Japan fell to 2.8 percent in June of 2017, down from 3.1 percent in the previous month. The figure came in below market consensus of 3 percent back to its 23-year low reached in the months February to April this year. Meanwhile, the jobs-to-applicants ratio was 1.51, up from 1.49 in the previous period and beating expectations of 1.50 to mark the highest level since February 1974.

Compared to the previous month, there were 1.89 million unemployed persons, 160 thousand less than in May. Employment increased by 120 thousand to 65.31 million, after falling by 30 thousand in May. The labour force declined by 40 thousand to 67.21 million while those detached from the labour force went down by 40 thousand to 43.73 million.

Among people aged 15 to 24 years old, the jobless rate dropped to 4.6 percent from 5.2 percent in May.

A year earlier, unemployment was higher at 3.1 percent.


Friday July 28 2017
Japan Inflation Rate Steady For 3rd Month At 0.4%
Statistics Japan l Rida Husna | rida@tradingeconomics.com

Consumer prices in Japan rose 0.4 percent year-on-year in June of 2017, the same as in the prior two months and matching market consensus. Food inflation was steady while cost of transport and housing declined.

In June, prices of food increased by 0.8 percent from a year earlier, the same as in May, namely, fresh food (0.5 percent from 0.4 percent), fish and seafood (5.5 percent from 5.9 percent) and fresh fruits (1.3 percent from -4.1 percent). In addition, prices fell further for fresh vegetables (-4.0 percent from -1.3 percent).

Meantime, prices increased more than in a month earlier for fuel, light and water charges (3.5 percent from 2.2 percent in May), mainly due to higher electricity cost (4.9 percent from 2.5 percent). Also, cost of clothing and footwear rose at a faster 0.2 percent (from 0.1 percent). Cost went up less than in a month earlier for education (0.4 percent from 0.6 percent) and was flat for medical care (from 0.3 percent). 

Cost fell for: housing (-0.2 percent from -0.2 percent), furniture and household utensils (-0.8 percent from -1.1 percent), transport & communication (-0.1 percent from 0.3 percent), culture and recreation (-0.1 percent from 0.6 percent) and miscellaneous goods and services (-0.1 percent from 0.1 percent). 

Core consumer prices, which exclude fresh food, went up 0.4 percent on the year, unchanged from the preceding month's reading  and in line with market estimates. The figure remained at its highest level since March of 2015.

On a monthly basis, consumer prices were flat, the same as in a month earlier.

In Tokyo, consumer prices rose 0.1 percent in July, compared to a flat reading in a month earlier and in line with estimates. Core consumer prices, which exclude fresh food, increased 0.2 percent and above consensus of a 0.1 percent rise.


Thursday July 20 2017
BoJ Keeps Rate Steady, Delays 2% Inflation Target
Bank of Japan l Rida Husna | rida@tradingeconomics.com

The Bank of Japan left its key short-term interest rate unchanged at -0.1 percent at its July 2017 meeting, as widely expected. Policymakers also kept its 10-years government bond yield target around zero percent but said they pushed back again the timing for achieving its 2 percent inflation target to sometime during fiscal 2019.

With regard to the amount of JGBs to be purchased, the Bank will conduct buying at more or less the current pace -- an annual pace of increase of about 80 trillion yen.

The BoJ also determined by a 7-2 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 6.0 trillion and about JPY 90 billion, 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.  

Meanwhile, in a quarterly review of the central bank's forecasts, it said the recent development in the CPI had been relatively weak, as evidenced by limited price rises at the start of the new fiscal year. That said, policymakers  lowered slightly its core CPI forecast for fiscal 2017 to 1.1 percent from the previous estimate of 1.4 percent made in April. Meantime, the timing of the CPI to reach around 2 percent will likely be around fiscal 2019. The BoJ has now pushed back the price target timeframe six times since Governor Kuroda launched huge asset-buying program in 2013.

Regarding economic growth, policymakers estimate the economy to expand 1.8 percent during fiscal 2017, stronger than an earlier projection made in April of 1.6 percent. Overseas economies have continued to grow at a moderate pace and Japan's exports have been on an increasing trend. Business fixed investment has been on a moderate increasing trend, with corporate profits and business sentiment inproving and across a wider range of industries. Private consumption has increased its resilient against the backdrop of steady improvement in the employment and income situation. At the same time, public investment has been turning toward an increase and housing investment has been more or less flat. 

Excerpts from the Outlook for Economic Activity and Prices:

With regard to the risk balance, risks to both economic activity and prices are skewed to the downside. On the price front, the momentum toward achieving the price stability target of 2 percent is maintained as the output gap is expected to continue improving and medium-to-long-term inflation expectations are projected to rise gradually; however, the momentum is not yet fully sufficiently firm, and thus development in prices contimue to warrant careful attention.

As for the conduct of monetary policy,  the Bank will contimue with "Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control," aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner. The Bank will make policy adjustments as appropriate, taking account of developments in economc activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target.

For fiscal 2018, the economy is expected to expand by 1.4 percent, slightly faster than a previous projection of a 1.3 percent growth. Core CPI for the year is projected to stand at 1.5 percent, down from 1.7 percent in an earlier forecast.