Tuesday October 01 2019
Japan Jobless Rate Still at 26-Year Low
Mario | mario@tradingeconomics.com

The unemployment rate in Japan remained unchanged at 2.2 percent in August 2019, the lowest since October 1992 and below market expectations of 2.3 percent. The jobs-to-applications ratio also remained steady at 1.59, the lowest since March 2018 but above market expectations of 1.58.

The number of unemployed was unchangd at 1.54 million in August, while employment grew by 190 thousand to 67.35 million. The labor force rose 180 thousand to 68.89 million and those detached from the labor force decreased 160 thousand to 41.97 million. 

The non-seasonally adjusted labor force participation rate currently stands at 62.3 percent, compard to 61.7 percent in August 2018.

A year earlier, the unemployment rate was higher at 2.4 percent.





Tuesday September 24 2019
BoJ Vows to Support the Economy: Gov Kuroda
Bank of Japan | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of Japan has no preset idea on whether to ease monetary policy when it meets next month, but policymakers are more keen to act than before since overseas risks are heightening, Governor Haruhiko Kuroda said in a speech at a meeting with business leaders in Osaka. Still, any decision would depend on financial markets movements and risks regarding overseas economy, he added, with possible measures for monetary easing including cutting the short-term policy interest rate, lowering the target level of 10-year Japanese government bond (JGB) yields, expanding asset purchases, and accelerating the expansion of the monetary base.

Excerpts from the speech at a Meeting with Business Leaders in Osaka:

The Bank of Japan has the same policy stance, in that preventing and insuring against risks are taken into consideration when conducting monetary policy. In doing so, what is essential for the Bank is assessment of the momentum toward achieving the price stability target of 2 percent. If there is a greater possibility that such momentum will be lost, the Bank will not hesitate to take additional easing measures. While various factors are considered when examining the momentum toward achieving the price stability target, the following two points are particularly important. First is whether the positive output gap, or the high level of economic activity, will be maintained, and whether firms' stance will shift toward further raising wages and prices under such situation. Second is developments in medium- to long-term inflation expectations of firms and households. Based on these points, the Bank deems that the momentum toward achieving the price stability target has been maintained so far. With the output gap remaining positive, moves to raise selling prices reflecting cost increases have been observed recently in a wide range of firms. As for the outlook, inflation expectations are projected to rise as many of the factors that have been delaying inflation will be resolved gradually and moves to raise prices will spread widely. Under these circumstances, the year-on-year rate of change in the CPI is likely to increase gradually toward 2 percent. Thus, the Bank judges it appropriate to continue with the current monetary policy.

However, given that slowdowns in overseas economies have continued to be observed and their downside risks seem to be increasing, it is becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target will be lost. Developments in the output gap warrant particular attention. If downside risks to overseas economies materialize, there is a possibility that the growth rate of Japan's economy will decelerate substantially through, for example, the prolonged weak exports and firms' investment stance becoming cautious. If this happens, the momentum toward achieving the price stability target could be affected through shrinkage of the output gap. Attention also should be paid to the fact that the impact of the so-called adaptive formation mechanism is large in Japan, in which the actual inflation rate affects inflation expectations. Although crude oil prices temporarily rose somewhat due to increased geopolitical risks, they have declined to some extent from a somewhat longer-term perspective, mainly against the background of the slowdown in overseas economies. If crude oil prices decline further and the actual inflation rate decreases clearly, inflation expectations also may be affected.

Considering that it is becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target will be lost, the Bank will thoroughly reexamine economic and price developments at the next MPM, when it releases the Outlook Report. It will examine economic and price developments from a broad perspective at the next MPM, based on observations that will be available by the time of the meeting, such as various economic indicators, the reports at the meeting of general managers of the Bank's branches, and developments in financial markets. Recently, the situation has been changing rapidly, with investors' risk aversion abating somewhat due to expectations for progress in U.S.-China trade negotiations. Let me also add that the Bank does not have any preconception at this point regarding the outcome of its examination.





Friday September 20 2019
Japan Inflation Rate Falls to 6-Month Low
Statistics Japan | Mario | mario@tradingeconomics.com

Japan's consumer price inflation fell to 0.3 percent year-on-year in August 2019 from 0.5 percent in the previous month and well below market expectations of 0.6 percent. It was the lowest inflation rate in six months, raising the chances of further stimulus after the Bank of Japan decided to leave policy unchanged in its September meeting but left the window wide open for easing, calling for a review of prices and the economy in October.

Food prices edged up 0.1 percent in August, slowing from a 0.9 percent gain in the previous month, as fresh food prices fell at a faster pace (-4.9 percent vs -0.7 percent). Other price declines were seen for fish & seafood (-0.5 percent vs 1.5 percent) and vegetables & seaweeds (-6.4 percent vs -1.9 percent). Meanwhile, upward pressure came from: cereals (1 percent vs 1.2 percent); meats (1.3 percent, the same as in July); cakes & candies (3.0 percent vs 2.8 percent); cooked food (0.6 percent vs 0.8 percent); and meals outside the home (0.9 percent, the same as in July).

Inflation was unchanged for housing (at 0.2 percent), culture & recreation (at 1.1 percent) and miscellaneous (at 1.0 percent), while prices dropped for transportation & communication (-1.2 percent, the same as in July) and medical care (-0.2 percent vs 0.6 percent). In contrast, prices rose faster for furniture & household utensils (2.3 percent vs 1.7 percent); clothes & footwear (0.6 percent vs 0.4 percent).

Annual core consumer inflation, which excludes fresh food, was at 0.5 percent in August, down from 0.6 percent in the previous month and in line with market expectations. The latest reading remained well below the Bank of Japan's 2 percent target and was at over a 2-year low. Stripping away the effect of fresh food and energy, consumer prices rose 0.6 percent in August, the same pace as in the previous month and slightly above expectations of 0.5 percent.

On a seasonally adjusted monthly basis, consumer prices were unchanged in August, following a 0.1 percent increase in the previous month. The core CPI was up 0.1 percent.




Thursday September 19 2019
BoJ Holds Rates, Signals More Easing in October
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 meeting, as widely expected, hours after the Federal Reserve lowered rates for the second time this year. Policymakers also kept the target for the 10-year Japanese government bond yield at around zero percent, but said they would review economic and price developments more thoroughly at the next policy meeting, heightening the chance of expanding stimulus as early as October.

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 trillion yen and about 90 billion yen, respectively. With a view to lowering risk premia of asset prices in an appropriate manner, the bank may increase or decrease the amount of purchases 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.  

Excerpts from the Statement on Monetary Policy:

Japan's economy has been on a moderate  expanding trend, with a virtuous cycle from income to spending operating, although exports, production, and business sentiment have been affected by the slowdown in overseas economies. Overseas economies have been growing moderately, although slowdowns have continued to be observed. In this situation, exports have shown some weakness. On the other hand, with corporate profits and business sentiment staying at high levels, business fixed investment has continued on an increasing trend. Private consumption has been increasing moderately, albeit with fluctuations, against the background of steady improvement in the employment and income situation. Housing investment and public investment have been more or less flat, reflecting the rise in domestic demand, and labor market conditions have remained tight. Meanwhile, financial conditions are highly accommodative. On the price front, the yoy rate of change in the consumer price index (CPI, all items less fresh food) is at around 0.5%. Inflation expectations have been more or less unchanged.

Risks to the outlook include the following: the US macroeconomic policies and their impact on global financial markets; the consequences of protectionist moves and their effects; developments in emerging and commodity-exporting economies such as China, including the effects of the two aforementioned factors; development in global adjustment in IT-related goods; negotiations on the UK's exit from the EU and their effects; and geopolitical risks. 

As for policy rates, the bank intends to maintain the current extremely low levels of short-and long-term rates for an extended period of time, at least through spring 2020, taking into account uncertainties regarding economic activity and prices including developments in overseas economies and the effects of the scheduled consumption tax hike. It will examine the risks considered mostrelevant to the conduct of monetary policy and make policy adjustment as appropriate, taking account of development in economic activity and prices s well as financial conditions, with a view to maintaining the momentum toward achieving price stability target. In particular, in a situation where downside risks are significant, the bank will not hesitate to take additional easing measures if there is greater possibility that the momentum toward achieving the price stability target will be lost.

Given that, recently, slowdowns in overseas economies have continued to observed and their downside risks seem to be increasing, the bank judges that its is becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target will be lost. Taking this situation into account, the bank will re-examine economic and price developments at the next MPM, when it updates the outlook for economic activity and prices.


Wednesday September 18 2019
Japan Trade Gap Narrows as Imports Slump
Ministry of Finance, Japan | Stefanie Moya | stefanie.moya@tradingeconomics.com

Japan's trade deficit narrowed to JPY 136.3 billion in August 2019 from JPY 448.1 billion in the same month a year earlier and compared to market expectations of a JPY 356 billion gap. Exports declined 8.2 percent, the ninth straight month of decline, while imports plunged 12 percent, as trade policy uncertainty continues to drag activity.

Exports fell 8.2 percent from a year earlier to JPY 6.14 trillion in August, compared to market forecasts of a 10.9 percent decline and July's 1.5 percent decrease. It was the ninth straight month of declines in shipments, amid weakening global demand and the US-China trade dispute. Lower sales were recorded in transport equipment (-8.2 percent), mainly due to motor vehicles (-7.2 percent), parts of motor vehicles (-13.6 percent) and motorcycles & autocycles (-32 percent); and machinery (-12.3 percent) namely semiconductor machinery (-24.5 percent),  power generating machines (-12.7 percent), computers and untis (-4.8 percent) and parts of computer (-9.5 percent); electrical machinery (-8.1 percent), in particular semiconductors (-2.7 percent), electrical apparatus (-14.5 percent) and measuring (-12.4 percent), batteries & accumulators (-15.3 percent) and electrical power machinery (-3.3 percent). Also, sales dropped for manufactured goods (-11 percent), of which iron & steel products (-13.6 percent), nonferrous metals (-10 percent), manufactures of metals (-8.5 percent), rubber (-8.6 percent), non-metallic mineral ware (-10.9 percent) and paper (-17.3 percent); and chemicals (-5.1 percent) mostly plastic materials (-6 percent) and organic chemicals (-6.9 percent). 

Among main trade partners, exports went down to China (-12.1 percent), the US (-4.4 percent), the EU (-1.3 percent), South Korea (-9.4 percent), Taiwan (-8.5 percent), Hong Kong (-11.5 percent), Singapore (-19.4 percent), Thailand (-3.6 percent), and Australia (-18.5 percent), but rose to the Middle East (0.7 percent).

Imports slumped 12 percent to JPY 6.28 trillion, compared to expectations of a 11.2 percent fall and the previous month's 1.2 percent decline. Purchases of mineral fuels dropped 25.3 percent, in particular petroleum (-25 percent), petroleum products (-28.8 percent), LNG (-23.3 percent), LPG (-32 percent) and coal (-24.5 percent). In addition, imports went down for electrical machinery (-8.9 percent), namely semiconductors (-12.5 percent) and telephony & telegraphy (-19.4 percent); machinery (-14.8 percent), of which power generating machines (-27.4 percent) and parts of computer (-0.8 percent); and foodstuff (-5 percent), namely fish & fish preparations (-14.5 percent), meat (-1.5 percent), cereals (-6.2 percent), vegetables (-6.8 percent) and fruits (-4.4 percent). Also, purchased declined for manufactured goods (-10 percent), mainly nonferrous metals (-21.5 percent), iron & steel products (-5.3 percent), metals (-4.6 percent), textile yarn & fabrics (-9.4 percent) and non-metallic mineral ware (-10.5 percent); chemicals (-4.2 percent), due to organic (-14.4 percent); transport equipment (-1.7 percent); and raw materials (-10 percent).

Imports dropped from China (-8.5 percent), South Korea (-10.3 percent), Taiwan (-6.8 percent), the US (-9.2 percent),  the EU (-2.3 percent), and the Middle East (-29.8 percent).




Monday September 09 2019
Japan Q2 GDP Growth Revised Lower to 0.3%
Cabinet Office | Rida Husna | rida@tradingeconomics.com

Japan's quarterly economic growth was revised lower to 0.3 percent in the second quarter of 2019 from a preliminary estimate of 0.4 percent and compared to the previous period's 0.5 percent growth. There was a sharp downward revision of capital expenditure amid weakness in the global economy and worsening trade protectionism.

In the June quarter, positive contributions came from private demand (0.3 percentage points), while changes in private inventories were neutral. On the other hand, net exports contributed negatively to the GDP.

Capital spending rose just 0.2 percent in the second quarter, much lower than a preliminary 1.5 percent rise and compared to a 0.2 percent contraction in the previous three-month period. Private consumption, which accounts for some 60 percent of GDP, increased 0.6 percent, the most in two years, after showing no growth in the first quarter. Also, public investment rose 1.8 percent, the most since Q2 2017 and faster than a preliminary 1 percent.

Exports of goods and services were flat (vs -2 percent in Q1), while imports jumped 1.7 percent (vs -4.3 percent in Q1).

On an annualized basis, the economy grew 1.3 percent in the second quarter, weaker than the preliminary reading of 1.8 percent and after a revised 2.2 percent expansion in the previous quarter.




Friday August 30 2019
Japan Jobless Rate Falls to 26-Year Low
Statistics Japan | Rida Husna | rida@tradingeconomics.com

The unemployment rate in Japan fell to 2.2 percent in July 2019, the lowest since October 1992 and below market expectations of 2.4 percent. The jobs-to-applications ratio declined to 1.59, the lowest since March 2018 and also below consensus of 1.61.

The number of unemployed fell 70 thousand from a month earlier to 1.54 million in July, while employment grew by 150 thousand to 67.16 million. The labor force rose 90 thousand to 68.71 million and those detached from the labor force decreased 30 thousand to 42.13 million.

Youth unemployment rate, measuring job-seekers between 15 and 24 years old, dropped to 3.4 percent in July, the lowest in five months, from 3.8 percent in June. 

A year earlier, the unemployment rate was higher at 2.5 percent.


Friday August 23 2019
Japan Inflation Rate Slows to 4-Month Low in July
Statistics Japan l Rida Husna | rida@tradingeconomics.com

Japan's consumer price inflation fell to 0.5 percent year-on-year in July 2019 from 0.7 percent in the previous month and in line with market expectations. This was the lowest inflation rate since March, amid a slowdown in food prices and a further fall in cost of transport and communication.

Prices of food rose by 0.9 percent in July, easing from a 1.4 percent increase in a month earlier. Within food, cost increased less for cereals (1.2 percent vs 1.3 percent in June); fish & seafood (1.5 percent vs 2 percent), of which  fresh fish & seafood (0.2 percent vs 1.2 percent); meat (1.3 percent vs 1.4 percent); cooked food (0.8 percent vs 1.1 percent); and meals outside the home (0.9 percent vs 1 percent). Also, prices of fresh food fell noticeably (-0.7 percent vs 2.8 percent); and cost of vegetables & seaweeds declined for the first time in three months (-1.9 percent vs 0.9 percent), in particular fresh vegetables (-3.3 percent vs 1 percent). By contrast, inflation was steady for oils, fats & seasonings (at 0.3 percent), while prices rose at a faster pace for dairy products & eggs (2.2 percent vs 2 percent).

Additionally, cost eased for fuel, light & water charges (2 percent vs 2.2 percent in June), namely gas (3 percent vs 3.9 percent), water & sewerage charges (0.2 percent vs 0.3 percent) and other fuel & light (-1.1 percent vs 0.3 percent); furniture and household utensils (1.7 percent vs 1.8 percent); and culture & recreation (1.1 percent vs 1.5 percent). Also, transportation & communication prices dropped for the eighth straight month (-1.2 percent vs -1.3 percent). On the other hand, inflation was unchanged for medical care (at 0.6 percent); while cost advanced slightly faster for housing (0.2 percent vs 0.1 percent); miscellaneous goods & services (1 percent vs 0.9 percent) and education (0.7 percent vs 0.6 percent). In addition, cost of clothes & footwear advanced 0.4 percent, after being flat in the prior month.

Annual core consumer inflation, which excludes fresh food, was at 0.6 percent in July, unchanged from June's 2-year low and also matching estimates. The latest reading remained well below the Bank of Japan's 2 percent target. Meanwhile, stripping away the effect of fresh food and energy, consumer prices rose by 0.6 percent year-on-year in July, following a 0.5 percent gain in June.

On a seasonally adjusted monthly basis, consumer prices rose by 0.1 percent in July, following a flat reading in the previous two months.


Monday August 19 2019
Japan Trade Deficit Widens in July
Ministry of Finance, Japan | Chusnul Ch Manan | chusnul@tradingeconomics.com

Japan's trade deficit widened to JPY 249.6 billion in July 2019 from JPY 227.4 billion in the same month a year earlier and larger than market expectations of a JPY 200 billion gap.

Exports dropped 1.6 percent from a year earlier to JPY 6.64 trillion in July, compared to market consensus of a 2.2 percent decline and June's 6.6 percent fall. It was the eighth straight month of decrease in shipments, amid weakening global demand and the US-China trade dispute. Declines were observed in machinery (-7.3 percent) led by semiconductor machinery (-13.5 percent), pump and centrifuges (-10.9 percent), metalworking machinery (-10.1 percent) and parts of computer (-11.1 percent); electrical machinery (-7.3 percent) due to semiconductors (-7.7 percent), electrical apparatus (-9.1 percent) and measuring (-7 percent), and electrical power machinery (-2.3 percent); manufactured goods (-5.1 percent) such as iron & steel products (-4.2 percent), nonferrous metals (-10.7 percent) and manufactures of metals (-6.4 percent); and chemicals (-0.1 percent) on the back of plastic materials (-2.7 percent) and organic chemicals (-2.2 percent). Conversely, transport equipment exports rose 7.7 percent, mainly due to motor vehicles (9.2 percent).
 
Among main trade partners, exports decreased to China (-9.3 percent), South Korea (-6.9 percent), Taiwan (-8.2 percent), Singapore (-22.3 percent), Thailand (-7.7 percent), and Australia (-15.3 percent). By contrast, exports were up to the US (8.4 percent), the EU (2.2 percent), and the Middle East (17.6 percent).
 
Imports declined 1.2 percent to JPY 6.89 trillion in July, compared to market expectations of a 2.7 percent drop and the previous month's 5.2 percent fall. Purchases of mineral fuels slumped 9.1 percent, mainly due to petroleum (-10 percent), petroleum products (-27.1 percent) and LNG (-6 percent). Also, imports of chemicals fell 6.6 percent on the back of medical products (-7.6 percent) and organic chemicals (-6.2 percent). In addition, arrivals of manufactured goods dropped 0.7 percent, in particular nonferrous metals (-15.3 percent) and iron & steel products (-6.8 percent). In contrast, imports grew for machinery (2.7 percent), transport equipment (2.1 percent), foodstuff (4.5 percent) and raw materials (1.3 percent).
 
Imports fell from South Korea (-8.6 percent), Taiwan (-5.3 percent), the EU (-4.3 percent), and the Middle East (-11.7 percent), of which the United Arab Emirates (-5.3 percent) and Saudi Arabia (-16.6 percent). Conversely, imports rose from China (2.8 percent), Thailand (6.6 percent), Vietnam (17.8 percent), the US (3.5 percent) and Australia (6.2 percent).


Friday August 09 2019
Japan Q2 GDP Growth Beats Estimates
Cabinet Office | Rida Husna | rida@tradingeconomics.com

The Japanese economy advanced 0.4 percent quarter-on-quarter in the three months to June 2019, easily beating market expectations of a 0.1 percent expansion and following an upwardly revised 0.7 percent growth in the previous period, a preliminary estimate showed.

Private demand expanded 0.7 percent in the second quarter (vs 0.3 percent in Q1), as household consumption grew by the most in two years (0.6 percent vs 0.1 percent) on the back of demand for cars and air conditioners. Also, capital expenditure rose sharply (1.5 percent vs 0.4 percent), far above forecasts of a 0.7 percent rise. Construction of hotels and leisure facilities led the gains, boosted by a steady stream of inbound tourists and an expected surge in demand ahead of the 2020 Tokyo Olympic Games.

In addition, public demand growth accelerated significantly (0.9 percent vs 0.2 percent), with government spending rebounding strongly (0.9 percent vs -0.1 percent) and public investment advancing further (1 percent vs 1.4 percent).

Meanwhile, external demand subtracted 0.3 percentage point to GDP growth. Exports of goods and services dropped 0.1 percent (vs -2 percent in Q1), while imports rose 1.6 percent (vs -4.3 percent in Q1).

On an annualized basis, the economy grew by 1.8 percent in the second quarter, after an upwardly revised 2.8 percent  expansion in the March quarter and far above estimates of a 0.4 percent advance.