Wednesday May 22 2019
Japan Trade Surplus Narrows Sharply
Mario | mario@tradingeconomics.com

Japan posted a trade surplus of JPY 60 billion in April 2019 compared with a JPY 621 billion surplus in the same month a year earlier and market expectations of a JPY 203 billion surplus. Exports declined for a fifth straight month while imports gained steam.

Exports declined 2.4 percent from a year earlier to JPY 6.66 trillion, compared to market consensus of a 1.8 percent drop and after a 2.4 percent fall in March. It was the fifth straight month of falls in shipments, amid weakening global demand and the US-China trade dispute. Shipments were mainly dragged by: electrical machinery (-4.6 percent), machinery (-4.1 percent), and transport equipment (-2.8 percent). In contrast, exports of foodstuff rose 6.1 percent. Among main trade partners, exports decreased to Australia (-15.2 percent), China (-6.3 percent), South Korea (-4.2 percent), and the EU (-2.6 percent). In contrast, exports to the United States jumped 9.6 percent.

Imports rose 6.4 percent to JPY 6.60 trillion, above market expectations of a 4.8 percent increase and following a 1.2 percent rise in the previous month. Purchases were mainly nudged by growth in purchases of transport equipment (15.1 percent), foodstuff (11.8 percent), raw materials (7.5 percent), and mineral fuels (7.0 percent). Among main trade partners, purchases climbed from: the EU (10.6 percent), China (5.6 percent), Australia (5.1 percent), and the US (2.3 percent). 




Monday May 20 2019
Japan Economy Unexpectedly Grows in Q1
Cabinet Office | Rida Husna | rida@tradingeconomics.com

The Japanese economy grew by 0.5 percent quarter-on-quarter in the three months to March 2019, easily beating market expectations of a 0.1 percent contraction and following a downwardly revised 0.4 percent advance in the previous period, a preliminary estimate showed.

The largest contribution to the GDP growth came from net exports (0.4 percentage points), followed by changes in private inventories (0.1 percentage points), while private demand subtracted 0.1 percentage points and public demand was neutral.

Net exports contributed positively to the growth for the first time over the past four quarters, as imports of goods and services plunged 4.6 percent (vs 3 percent in Q4), the biggest decrease since the first quarter of 2009. Meantime, exports fell at a slower 2.4 percent (vs 1.2 percent in Q4), the steepest decline since the second quarter of 2015.

Meanwhile, private demand growth eased to 0.1 percent in the March quarter from 0.8 percent in the preceding period, due to declines in both private consumption (-0.1 percent vs 0.2 percent) and capital expenditure (-0.3 percent vs 2.5 percent).

Public demand rose 0.2 percent (vs 0.3 percent in Q4), as a rebound in public investment (1.5 percent vs -1.4 percent) offset a contraction in government spending (-0.2 percent vs 0.7 percent).

On an annualized basis, the economy grew 2.1 percent in the first quarter, following a downwardly revised 1.6 percent expansion in the previous period and also beating market expectations for a 0.2 percent contraction.




Friday April 26 2019
Japan March Jobless Rate Above Estimates
Statistics Japan l Rida Husna | rida@tradingeconomics.com

The seasonally adjusted unemployment rate in Japan increased to 2.5 percent in March 2019 from a five-month low of 2.3 percent in the previous month while markets had expected 2.4 percent. Meanwhile, the jobs-to-applicants ratio remained unchanged at a high level of 1.63 but below consensus of 1.64.

The number of unemployed rose 140 thousand from a month earlier to 1.70 million in March, and employment grew by 180 thousand to 67.32 million. The labor force went up 330 thousand to 69.06 million and those detached from the labor force fell 320 thousand to 41.82 million.

Youth unemployment rate, measuring job-seekers between 15 and 24 years old, increased to 3.6 percent in March from 3.4 percent in February. This was the highest reading since August last year when the rate was at 4.1 percent.

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




Thursday April 25 2019
BoJ Holds Rates, Revises Forward Guidance
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 meeting and kept the target for the 10-year government bond yield at around zero percent, as widely expected. The Committee said it intends to keep the current extremely low levels of short-term and long-term interest rates for an extended period of time, at least through around 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.

The Bank of Japan previously committed to hold low rates for an extended period but it had not specified any time frame.

In addition, the central bank said it would examine uncertainties regarding economic activities and prices including the effects of the scheduled consumption tax hike and development in overseas economies. By continuing with powerful monetary easing and maintaining the output gap within positive territory, the bank will aim to achieve the price stability ratget at the earliest possible time, while securing stability in economic and financial conditions.

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. 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 Outlook for Economic Activity and Prices:

Japan's economy is likely to continued on an expanding trend through fiscal 2021 despite being affected by the slowdown in overseas economies for the time being. Although exports are prejected to show some weakness for the time being, they are expected to be on a moderate increasing trend, with overseas economies growing moderately on the whole. Domestic demand also is likely to follow an uptrend, mainly against the background of highly accommodative financial conditions and the underpinnings through government spending, despite being affected by such factors as the scheduled consumption tax hike.

The year-on-year rate of change in the consumer price index (CPI, all items less fresh food) has been positive but has continued to show relatively weak developments compared to the economic expansion and the labor market tightening. This is mainly attributable to (1) such fastors as firms' cautious wage-and price-setting stance not having changed clearly yet in a sitiation where the mindset and behaviour based on the assumption that wages and prices will not increase easily have been deeply entrenched and (2) firms moves toward raising productivity as well as the technological progress in recenr years. While it has been taking time to resolve these factors that have been delaying price rises, medium-to long-term inflation expectations have been more or less unchanged. Nonetheless, with the output gap remaining positive, firms; stance gradually will shift toward further raising wages and prices and households' tolerance of price rises will increase. In this situation, further price rises are likely to be observed widely and then medium-to long-term inflation expectations are projected to rise gradually. As a consequence, the year-on-year of change in the CPI is likely to increase gradually toward 2 percent.

With regard to the risks balance, risks to both economic activity and prices were skewed to the downside. On the price front, the momentum toward achieving the price stability target of 2 percent is maintained but is not yet suffficiently firm, and developments in prices continue to warrant careful attention. 




Friday April 19 2019
Japan March Inflation Rate Rises to 4-Month High of 0.5%
Statistics Japan l Rida Husna | rida@tradingeconomics.com

Japan's consumer price inflation rose to 0.5 percent year-on-year in March 2019 from 0.2 percent in the previous month and in line with market consensus. It was the highest inflation rate since November last year, as cost of both food and transport declined at a softer pace.

Prices of food dropped by 0.3 percent year-on-year in March, after a 1.4 percent fall in February and marking the fourth consecutive decline. Among food, cost decreased less for fresh food (-5.9 percent vs -10.9 percent in February); vegetables & seaweeds (-9 percent vs -15 percent), of which fresh vegetables (-14.3 percent vs -22.2 percent); and oils, fats & seasonings (-0.2 percent vs -0.3 percent). Additionally, prices rose further for both meals outside the home (1.1 percent vs 1 percent); and meat (0.9 percent vs 0.4 percent), and rebounded for fruits (2.8 percent vs -1 percent), namely fresh fruits (2.7 percent vs -1.4 percent). Meantime, inflation slowed for cereals (0.6 percent vs 0.7 percent); dairy products & eggs (2.3 percent vs 2.4 percent); fish & seafood (1.1 percent vs 1.5 percent), mostly fresh fish & seafood (-0.3 percent vs 0.6 percent); and cooked food (0.3 percent vs 0.5 percent).

Also, cost of transportation & communication fell less (-0.3 percent vs -0.6 percent) and prices advanced further for furniture and household utensils (1.5 percent vs 0.8 percent); miscellaneous goods & services (1 percent vs 0.9 percent); and medical care (1.3 percent vs 1.1 percent). In addition, cost of clothes & footwear rebounded (0.1 percent vs -0.1 percent). On the other hand, prices eased fuel, light & water charges (5.1 percent vs 5.3 percent), namely electricity (7.2 percent vs 7.7 percent); and culture & recreation (0.9 percent vs 1.4 percent); and inflation was steady for education (0.5 percent). Also, cost of housing was flat for the second straight month.

Annual core consumer inflation, which excludes fresh food, inched higher to 0.8 percent in March from 0.7 percent in February and slightly above market consensus of 0.7 percent. The figure came in well below the Bank of Japan's target of 2 percent.


On a seasonally adjusted monthly basis, consumer prices were unchanged in March, the same as in February.




Wednesday April 17 2019
Japan Trade Surplus Narrows in March
Ministry of Finance l Mario | mario@tradingeconomics.com

Japan posted a trade surplus of JPY 529 billion in March 2019 compared with a JPY 784 billion surplus in the same month a year earlier and beating market expectations of a JPY 372 billion surplus. Exports declined for a fourth straight month while imports increased below expectations.

Exports declined 2.4 percent from a year earlier to JPY 7.20 trillion, compared to market consensus of a 2.7 percent drop and after a 1.2 percent fall in February. It was the fourth straight month of falls in shipments, amid weakening global demand and the US-China trade dispute. Shipments fell sharply for: machinery (-5.4 percent), namely textile machines (-22.6 percent) and metalworking machinery (-16.9 percent); manufactured goods (-6.8 percent) such as iron & steel products (-9.6 percent) and nonferrous metals (-12.9 percent); electrical machinery (-5.2 percent), including semiconductors (-7.6 percent) and others (-4.3 percent). In contrast, overseas sales rose for transport equipment (2.4 percent), namely cars (1.5 percent), ships (54.6 percent) and aircraft (10.7 percent); and chemicals (0.6 percent).

Among main trade partners, exports decreased to China (-9.4 percent), South Korea (-9.0 percent), Australia (-24.1 percent), Malaysia (-13.7 percent), and Indonesia (-13.8 percent). In contrast, exports to the United States rose 4.4 percent.

Imports rose 1.1 percent from a year earlier to JPY 6.67 trillion, below market expectations of a 2.6 percent increase and following a 6.7 percent drop in the previous month. Purchases advanced primarily for electrical machinery (5 percent); others (8 percent), of which clothing & accessories (15 percent); chemicals (2.4 percent); manufactured goods (5.7 percent); foodstuff (2 percent) and transport equipment (0.4 percent). In contrast, imports declined for mineral fuels (-4 percent); raw materials (-5.2 percent) and machinery (-2.5 percent).

Among main trade partners, purchases from Australia surged 22.3 percent and from China 10.9 percent. In contrast, imports from the United States edged down 0.2 percent.


Friday March 29 2019
Japan Jobless Rate Falls to 5-Month Low
Statistics Japan l Rida Husna | rida@tradingeconomics.com

The seasonally adjusted unemployment rate in Japan dropped unexpectedly to 2.3 percent in February 2019 from 2.5 percent in the previous month while markets had expected 2.5 percent. It was the lowest jobless rate since September last year. Meanwhile, the jobs-to-applicants ratio remained unchanged at 1.63 and in line with consensus.

The number of unemployed decreased 120 thousand from a month earlier to 1.60 million in February, while employment rose by 490 thousand to 67.14 million. The labor force increased 340 thousand to 68.73 million and those detached from the labor force fell 370 thousand to 42.14 million.

Youth unemployment rate, measuring job-seekers between 15 and 24 years old, went up to 3.4 percent in February from 3.2 percent in January.

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


Friday March 22 2019
Japan February Inflation Rate Weaker than Expected
Statistics Japan | Rida Husna | rida@tradingeconomics.com

Japan's consumer price inflation stood at 0.2 percent year-on-year in February 2019, unchanged from the previous month's 15-month low and below market expectations of 0.3 percent. Prices of both food and transportation & communication fell for a third month in a row, while housing costs were flat.

Prices of food dropped by 1.4 percent year-on-year in February, after a 1.5 percent fall in January and marking the third straight month of declines. Among food, cost continued to fall for vegetables & seaweeds (-15 percent vs -14.4 percent), of which fresh vegetables (-22.2 percent vs -21.2 percent); fruits (-1 percent vs -2.7 percent), of which fresh fruits (-1.4 percent vs -3.3 percent); and oils, fats & seasonings (-0.4 percent vs -0.6 percent). In addition, inflation slowed for dairy products & eggs (2.4 percent vs 2.8 percent), meals outside the home (1 percent vs 1.1 percent); while was steady for cereals (at 0.7 percent). Meantime, cost rose faster for fish & seafood (1.6 percent vs 1.5 percent), of which fresh fish & seafood (0.6 percent vs 0.5 percent), cooked food (0.4 percent vs 0.1 percent), and meat (0.4 percent vs 0.3 percent).

In addition, cost of transportation & communication declined for the third consecutive month (-0.6 percent vs -0.2 percent), while prices were unchanged for housing (vs -0.1 percent in January) and clothes & footwear (vs 0.2 percent in January). Meanwhile, inflation was steady for miscellaneous goods & services (at 0.9 percent), while slowed for: culture & recreation (1.4 percent vs 1.5 percent); medical care (1.2 percent vs 1.3 percent); and education (0.4 percent vs 0.5 percent). Cost went up slightly faster for fuel, light & water charges (5.3 percent vs 5.2 percent), of which electricity (7.7 percent vs 7.2 percent) and gas (6.2 percent vs 5.6 percent).  

Annual core consumer inflation, which excludes fresh food, inched lower to 0.7 percent in February from 0.8 percent in January and also below market consensus of 0.8 percent. The figure came in well below the Bank of Japan's target of 2 percent.

On a seasonally adjusted monthly basis, consumer prices were unchanged in February, after a 0.3 percent rise in January.


Monday March 18 2019
Japan Trade Balance Swings to Surplus in February
Ministry of Finance | Joana Ferreira | joana.ferreira@tradingeconomics.com

Japan posted a trade surplus of JPY 339 billion in February 2019, compared with a JPY 14 billion deficit in the same month a year earlier and market expectations of a JPY 310 billion surplus.

Exports declined 1.2 percent from a year earlier to JPY 6.38 trillion in February, worse than market consensus of a 0.9 percent drop and after an 8.4 percent plunge in January. It was the third straight month of falls in shipments, amid weakening global demand and the US-China trade dispute. Exports fell for: transport equipment (-3.1 percent), in particular cars (-6.1 percent) and parts of motor vehicles (-5 percent); electrical machinery (-5.6 percent), such as semiconductors (-10.7 percent), electrical apparatus (-8 percent) and telephony, telegraphy (-18.6 percent); and manufactured goods, namely iron and steel (-13.8 percent) and nonferrous metals (-10 percent). By contrast, sales of chemicals rose 4.6 percent and those of machinery increased 1.7 percent, due mainly to power generating machine (5.6 percent) and semicon machinery (0.3 percent).

Among major trade partners, exports declined to South Korea (-13.8 percent), Singapore (-18.2 percent), Thailand (-2.7 percent), Australia (-13.3 percent), Germany (-1.5 percent) and the Middle East (-9.9 percent), but rose to China (5.5 percent), Hong Kong (2.3 percent), Taiwan (0.3 percent), the US (2 percent) and the Middle South America (8.4 percent).

Imports slumped 6.7 percent to JPY 6.05 trillion, far more than market expectations of a 5.8 percent fall and following a revised 0.8 percent decline in the previous month. It was the biggest drop since November 2016, as purchases of mineral fuels plunged 6.3 percent on petroleum (-11.2 percent), petroleum products (-27.9 percent) and coal (-2.3 percent). Imports also fell for: electrical machinery (-4.3 percent), of which telephony, telegraphy (-1.9 percent) and semiconductors (-6 percent); machinery (-6.2 percent), particularly power generating machine (-12.1 percent) and computers and units (-0.2 percent); chemicals (-9.3 percent); manufactured goods (-7.8 percent), namely nonferrous metals (-12.2 percent) and manufactures of metals (-11 percent); foodstuff (-5.5 percent); raw materials (-11 percent); and others (-9.5 percent), such as clothing and accessories (-13.1 percent) and scientific, optical inst (-8 percent).

Imports dropped from China (-15.8 percent), South Korea (-10.7 percent), Taiwan (-4.4 percent), Indonesia (-14.3 percent), Australia (-5.5 percent), Saudi Arabia (-18.7 percent), but grew from Thailand (9.8 percent), the US (4.9 percent), Germany (1 percent) and the UAE (1.4 percent).


Friday March 15 2019
BoJ Holds Rates, Lowers Export and Output Assessment
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 March meeting, as widely expected. Policymakers also kept the target for the 10-year Japanese government bond yield at around zero percent, but offered weaker views on exports and output amid rising global headwinds.

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. 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 is expanding moderately, with a virtuous cycle from income to spending operating. Overseas economies have been growing moderately on the whole, although slowdown have been observed. In this situation, exports have shown some weakness recently. On the domestic demand side, business fixed investment has continued on an increasing trend, with corporate profits and business sentiment staying at a favorable level. 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 development in demand both at home and abroad, industrial production has been on a moderate increasing trend, although it has shown some weakness recently. 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. Although exports are projected to show some weakness for the time being, they areexpected to be on a  moderate increasing trend on the back of overseas economies growing moderately on the whole. 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 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 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.