Friday June 22 2018
Japan May Inflation Rate Higher than Estimated
Statistics Japan l Rida | rida@tradingeconomics.com

Japan's consumer price inflation rose to 0.7 percent year-on-year in May of 2018 from 0.6 percent in the prior month and well above market consensus of 0.3 percent. Prices increased at a faster pace for food and transport while cost fell less for housing.

In May, prices of food increased by 0.8 percent year-on-year, after a 0.7 percent rise in April. Cost rose more for fresh fruits (2.6 percent from 2.2 percent); fish and seafood (3.5 percent from 2.6 percent); and dairy product and eggs (3 percent from 2.6 percent), while fell more for fresh food (-0.7 percent from -1.5 percent). 

In addition, cost went up at a faster pace for: transport & communication (1.3 percent from 1.1 percent); and miscellaneous (0.3 percent from 0.1 percent), while inflation was steady for: medical care (1.9 percent); clothes and footwear (0.1 percent); and education (0.3 percent). At the same time, cost of housing declined by 0.1 percent, compared to a 0.2 percent fall in a month earlier. On the other hand, cost increased less for: fuel, light and water charges (3.1 percent from 3.6 percent as cost of electricity increased by 3.3 percent, slower than a 4.4 percent rise in the prior month); and was flat for culture and recreation (after a 0.2 percent rise in April). Meanwhile, cost continued to drop for furniture and household utensils (-1.5 percent from -1.5 percent in the prior month).

Core inflation rate, which excludes fresh food, came in at 0.7 percent, the same as in April and in line with estimates. It remained the lowest figure since September 2017.

On a monthly basis, consumer prices went up by 0.1 percent, compared to a 0.4 percent fall in the preceding month and marking the first monthly rise in three months.




Monday June 18 2018
Japan Trade Gap Widens 183% YoY in May
Ministry of Finance | Rida | rida@tradingeconomics.com

The trade gap in Japan increased sharply to JPY 578.3 billion in May of 2018 from JPY 204.4 billion a year earlier while markets estimated a JPY 235 billion deficit.

In May, imports surged 14 percent year-on-year to JPY 6,901 billion, beating consensus of a 8.2 percent rise and reaching the highest value since January. Purchases of mineral fuels rose by 20.7 percent, namely petroleum (28.6 percent), and those of electrical machinery increased 6.2 percent, in particular semiconductors (10.9 percent). Also imports advanced for: chemicals (19.1 percent); machinery (10.6 percent), driven by power generating machine (10.3 percent); manufactured goods (15.5 percent), of which non-ferrous metals (20.8 percent), iron & steel products (19.9 percent) and manufactures of metals (14.1 percent); foodstuff (8.2 percent), of which meat and meat preparation (6.2 percent) and fruits (6 percent); transport equipment (36.4 percent), namely motor vehicles (10.7 percent) and aircraft (264.4 percent); others (6.4 percent), of which clothing and accessories (13.4 percent); and scientific, optical instruments (9.2 percent).

Among major trading partners, inbound shipments increased from Asia (9.4 percent), mainly from China (8.6 percent); South Korea (12.7 percent); Taiwan (12.2 percent); Thailand (12.4 ). Also, purchases grew from the US (19.9 percent); the Western Europe countries (14 percent), mainly from Germany (11 percent), the UK (16.3 percent); Australia (21.1 percent); and the Middle East (33.5 percent).

Exports rose by 8.1 percent year-on-year to JPY 6,323 billion, above expectations of a 7.5 percent gain in the prior month and marking the strongest growth in 4 months. Sales of transport equipment advanced 1.7 percent, mainly led by cars (6.2 percent), and those of machinery went up 9.9 percent, namely power generating machine (4.9 percent) and semicon machinery (23.4 percent). Also, exports rose for electrical machinery (11.3 percent), of which semiconductors (8.4 percent); chemicals (12.5 percent); others (2.2 percent), mainly driven by photographic supplies (10.7 percent); and manufactured goods (10.7 percent).

Sales to Asia rose 9.8 percent, mainly to China (13.9 percent), Taiwan (12.5 percent), and Singapore (11.5 percent), while those to Hong Kong (-4.6 percent), South Korea (-0.6 percent) fell. At the same time, exports grew to the US (5.8 percent); the Middle East (15 percent) and Australia (28.1 percent). In contrast, sales declined to the EU countries (-0.3 percent), mainly the UK (-8.1 percent). 

Considering the first five months 2018, Japan's trade deficit narrowed to JPY 104.7 billion from JPY 590.1 billion in the same period of the preceding year.




Friday June 15 2018
BoJ Holds Policy Steady, Lowers Inflation Assessment
Bank of Japan l Rida | rida@tradingeconomics.com

The Bank of Japan left its key short-term interest rate unchanged at -0.1 percent at its June 2018 meeting, as widely expected. Policymakers also kept its 10-year government bond yield target around zero percent but lowered their assessment on inflation to be in a range of 0.5 to 1 percent for 2018 fiscal year.

Previously in April, the central bank said inflation was moving around 1 percent.

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 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 6.0 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.  

Excerpts from the Statement by the Bank of Japan:

Japan's economy is expanding moderately, with a virtuous cycle from income to spending opearting. 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. Housing investment has been weakening somewhat. Meanwhile, public investment 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 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 in the range of 0.5-1 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 household and corporate sectors, mainly against the background of highly accommodative financial conditions and underpinnings through the 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 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 effects, 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.





Friday June 08 2018
Japan Q1 GDP Growth Shrinks for First Time in 9 Quarters
Cabinet Office | Rida | rida@tradingeconomics.com

The Japanese economy contracted 0.2 percent quarter-on-quarter in the March quarter of 2018, unchanged from the preliminary figure and after an upwardly revised 0.3 percent growth in the previous period. It is the first contraction since the fourth quarter 2015, as an unexpected decline in household consumption offset a rise in business spending.

In the three months to March, negative contribution to GDP growth came from private demand (-0.2 percentage points), of which private residential investment (-0.1 percentage points) and change in private inventories (-0.2 percentage points), while private consumption gave no contribution and business spending added 0.1 percentage points to growth. At the same time, public demand made no contribution to growth while net exports added 0.1 percentage points.

Private demand declined by 0.3 percent, similar to the preliminary figure. Private consumption fell by 0.1 percent, compared to a flat reading in the preliminary estimate and markets expectation of a 0.4 percent rise. It follows an upwardly revised 0.3 percent rise in the previous quarter. Also, private residential investment dropped by 1.8 percent, less than the earlier estimate of a 2.1 percent fall and following a 2.7 percent decrease in Q4. Meantime, private non-residential investment/business spending grew by 0.3 percent, way better than the preliminary figure of a 0.1 percent decline and beating market forecasts of a 0.2 percent increase and after a 0.7 percent rise in the prior quarter. 

Meanwhile, public demand was flat, the same as in the preliminary estimate. Government consumption increased by 0.1 percent, compared to a flat reading in the preliminary estimate and similar to the figure recorded in the December quarter. At the same time, public investment declined by 0.1 percent, compared to the preliminary figure of no growth and after a 0.4 percent fall in the prior quarter.

Exports grew by 0.6 percent, the same as in the preliminary figure and compared to a 2.2 percent growth in the December quarter. Imports went up by 0.3 percent, unrevised from an earlier estimates and following a 3.1 percent growth in the preceding quarter.

On an annualised basis, the economy shrank 0.6 percent, the same as the preliminary estimate but worse than market consensus of a 0.4 percent contraction and following an upwardly revised 1 percent expansion in the preceding quarter. It is the first contraction in more than two years, ending the longest straight period of uninterrupted growth in 28 years. 





Tuesday May 29 2018
Japan Jobless Rate Steady at 2.5% for 3rd Month
Statistics Japan l Rida | rida@tradingeconomics.com

The unemployment rate in Japan stood at 2.5% in April 2018, the same as in the prior two months and matching market estimates. Also, the jobs-to-applicants ratio was unchanged from the previous month at 1.59 while markets expected 1.6.

Compared to the preceding month, there were 1.72 million unemployed persons in April, 10 thousand less than in March. Employment decreased by 10 thousand to 66.93 million, after an increase of 480 thousand in a month earlier. The labour force dropped by 50 thousand to 68.62 million while those detached from the labour force went up 60 thousand to 42.35 million.

Among people aged 15 to 24 years old, the jobless rate held steady at 3.8 in April.

A year earlier, unemployment was higher at 2.8 percent.




Monday May 21 2018
Japan Trade Surplus Widens 30.9% in April
Ministry of Finance, Japan | Chusnul Ch Manan | chusnul@tradingeconomics.com

Japan's trade surplus widened 30.9 percent to JPY 626 billion in April 2018 from JPY 478 billion in the same month a year earlier and far above market expectations of a JPY 405.6 billion surplus.

Exports increased by 7.8 percent year-on-year to JPY 6,822 billion in April, following a 2.1 percent rise in the previous month, but missing market expectations of 8.1 percent growth. Sales of transport equipment rose by 11.8 percent, boosted by cars (16.1 percent), and those of machinery went up 8.7 percent, namely power generating machine (5 percent) and semicon machinery (18.2 percent). Also, exports rose for electrical machinery (4.8 percent), of which semiconductors (4.3 percent); chemicals (5 percent); and manufactured goods (4.1 percent).

Among major trading partners, sales to Asia rose 6 percent, mainly to China (10.9 percent), Taiwan (0.8 percent), Hong Kong (1.3 percent) and Singapore (9.7 percent), while those to South Korea (-4.3 percent) and Thailand (-0.4 percent) fell. In addition, exports grew to the US (4.3 percent); the EU (14.1 percent), mainly Germany (14.7 percent) and the UK (21.5 percent); and the Middle East (6.8 percent).
 
Imports went up at a softer 5.9 percent to JPY 6,196 billion in April, compared to a 0.6 percent fall the preceding month and also missing market consensus of a 9.6 percent gain. Purchases of mineral fuels rose by 9.7 percent, namely petroleum (16.9 percent), and those of electrical machinery went up 1.2 percent, in particular semiconductors (5.3 percent). Also imports increased for: chemicals (7.1 percent); machinery (14.1 percent), of which computers and units (6.3 percent); manufactured goods (9.6 percent), of which non-ferrous metals (19.5 percent), iron & steel products (10.5 percent) and manufactures of metals (10.6 percent); foodstuff (3.2 percent), of which meat and meat preparation (10.5 percent) and fruits (4.4 percent). In contrast, imports of transport equipment dropped 5.8 percent, namely aircraft (-39.9 percent).

Imports increased from: China (2.2 percent); South Korea (16.7 percent); Taiwan (9.9 percent); Thailand (12.4 percent); Australia (12.9 percent); the US (3.9 percent); Germany (3 percent); Saudi Arabia (19.1 percent); and the UAE (29.6 percent). On the other hand, imports decreased from Malaysia (-11.2 percent), Russia (-5.7 percent) and the Middle South America (-6.5 percent).
 
In the first four months of the year, Japan's trade surplus narrowed to JPY 477 billion from JPY 794 billion in the same period of the previous year.


Friday May 18 2018
Japan April Inflation Rate Weaker than Expected
Statistics Japan l Rida | rida@tradingeconomics.com

Japan's consumer price inflation fell to 0.6 percent year-on-year in April of 2018 from 1.1 percent in the prior month and below market consensus of 0.7 percent. It is the lowest rate since last November, as food inflation eased to 5-month low and cost of transport increased less.

In April, prices of food increased by 0.7 percent year-on-year, much slower than a 1.9 percent rise in March. It is the lowest food inflation since a decline in November 2017 as cost rose less for fresh fruits (2.2 percent from 3.3 percent) and fish and seafood (1.3 percent from 4.4 percent), while fell for fresh food (-1.5 percent from 6.3 percent). Meantime, prices of dairy product and eggs went up by 2.6 percent, following a 0.3 percent drop in the previous month.

In addition, cost went up at a softer pace for: fuel, light and water charges (3.6 percent from 4 percent as cost of electricity increased by 4.4 percent, softer than a 5.2 percent rise in the prior month); transport & communication (1.1 percent from 1.7 percent); culture and recreation (0.2 percent from 0.5 percent); and miscellaneous (0.1 percent from 0.5 percent). At the same time, cost continued to fall for housing (-0.2 percent, compared to -0.2 percent) and furniture and household utensils (-1.5 percent from -1.4 percent). On the other hand, cost rose more for medical care (1.9 percent from 1.7 percent); while picked up for clothes and footwear (0.1 percent, compared to a flat reading in March); and inflation was steady for education (0.3 percent).

Core inflation rate, which excludes fresh food, eased to 0.7 percent from 0.9 percent in March, while markets estimated 0.7 percent. It is the lowest figure since September 2017.

On a monthly basis, consumer prices declined by 0.4 percent, the same as in the preceding month.


Wednesday May 16 2018
Japan GDP Shrinks for First Time in Over 2 Years
Cabinet Office | Rida | rida@tradingeconomics.com

The Japanese economy contracted 0.2 percent on quarter in the three months to March of 2018, following a downwardly revised 0.1 percent growth in the previous period while markets expected no growth, preliminary estimates showed. It was the first contraction since the fourth quarter of 2015, as private investment fell and households' consumption was unchanged.

The largest negative contribution to GDP was from private demand at 0.2 percentage points, of which private residential investment (-0.1 percentage points) and change in private inventories (-0.1 percentage points). Meanwhile, net trade had a positive contribution of 0.1 percentage points while public demand was neutral.

Private demand fell 0.3 percent in the first quarter (vs 0.3 percent in Q4), driven by a decline in both private residential investment (-2.1 percent vs -2.7 percent), and private non-residential investment (-0.1 percent vs 0.6 percent). In addition, private consumption stalled as widely expected, following a downwardly revised 0.2 percent growth in the fourth quarter, as households' consumption was unchanged (vs 0.2 percent in Q4).

Also, public demand was flat, after a 0.1 percent drop in the fourth quarter, with both government consumption and public investment showing no growth.

On the other hand, net external demand contributed positively to GDP growth, as exports rose 0.6 percent (vs 2.2 percent in Q4) while imports advanced at a softer 0.3 percent (vs 3.1 percent in Q4).

On an annualised basis, the GDP shrank 0.6 percent in the first quarter, compared to a downwardly revised 0.6 percent expansion in the preceding period and worse than market expectations of a 0.2 percent fall. It was the first contraction in two years, ending the longest straight period of uninterrupted growth in 28 years. Private consumption and public demand were flat while investment spending fell.


Friday April 27 2018
BoJ Holds Policy Steady, Removes Inflation Target Date
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 April 2018 meeting, as expected. Policymakers also kept its target for 10-year government bond yield around zero percent but dropped their target date for reaching 2 percent inflation.

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 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 6.0 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.  

Regarding prices, the central bank previously had mentioned it expected inflation to hit 2 percent around fiscal 2019.

Meanwhile in a quarterly review of the central bank's forecasts, the BOJ said 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 suffficiently firm, and developments in prices continue to warrant careful attention. For fiscal 2018, core CPI is projected to rise by 1.3 percent, down slightly from an earlier forecast of 1.4 percent. At the same time, the economy is expected to expand by 1.6 percent, stronger than a 1.4 percent expansion in the previous estimate, mainly reflecting solid growth in overseas economies.

Excerpts from the Outlook for Economic Activity and Prices:

Japan's economy is likely to continue its moderate expansion. In fiscal 2018, domestic demand is likely to follow an uptrend, with a virtuous cycle from income to spending being maintained in both corporate and household sectors on the back of highly accommodative financial conditions and fiscal spending through the government's large stimulus measures. Business fixed investment is likely to continue increasing amid accommodative financial conditions, led mainly by investment intended for domestic capacity expansion in line with the economic expansion, Olympic Games-related investment, and labor-saving investment to address the labor shortage. Private consumption is also expected to follow a moderate increasing trend as emplyment and income situation continues to improve. Public investment is expected to remain at a relatively high level, mainly reflecting the supplementary budget for fiscal 2017 and Olympic Games-related demand, although the positive effects resulting from the government's past stimulus measures are likely to diminish moderately. Exports are expected to continue their moderate increasing trend on the back of the firm growth in overseas economies.

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.


Thursday April 26 2018
Japan Jobless Rate Steady at 2.5% in March
Statistics Japan l Rida Husna | rida@tradingeconomics.com

The unemployment rate in Japan stood at 2.5 percent in March of 2018, the same as in the prior month and matching market estimates. Meanwhile, the jobs-to-applicants ratio edged up to 1.59 from 1.58 in the preceding month and in line with consensus.

Compared to the previous month, there were 1.73 million unemployed persons, 40 thousand more than in February. Employment increased by 480 thousand to 66.94 million, after an increase of 510 thousand in a month earlier. The labour force rose by 530 thousand to 68.67 million while those detached from the labour force dropped by 550 thousand to 42.29 million.

Among people aged 15 to 24 years old, the jobless rate fell  to 3.8 percent from 4.2 percent in February.

A year earlier, unemployment was higher at 2.8 percent.