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

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

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

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

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

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




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

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

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

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

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

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

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





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

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

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

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

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

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

Excerpts from the Outlook for Economic Activity and Prices:

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

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




Tuesday July 31 2018
Japan June Jobless Rate Rises to 2.4%
Statistics Japan l Rida | rida@tradingeconomics.com

The unemployment rate in Japan rose to 2.4 percent in June of 2018 from 2.2 percent in the previous month and slightly above markets estimates of 2.3 percent. Meanwhile, the jobs-to-applicants ratio increased to 1.62 from 1.6 in May, beating expectations of 1.6 and reaching the highest figure since January 1974.

Compared to the preceding month, there were 1.66 million unemployed persons in June, 150 thousand more than in May. Employment fell by 410 thousand to 66.32 million, after a decrease of 200 thousand in a month earlier. The labour force decreased by 220 thousand to 67.99 million while those detached from the labour force went up 300 thousand to 43 million.

Among people aged 15 to 24 years old, the jobless rate increased to 3.8 percent from 3.4 percent in May.

A year earlier, unemployment was higher at 2.8 percent.




Friday July 20 2018
Japan June Inflation Rate Weaker than Estimated
Statistics Japan l Rida | rida@tradingeconomics.com

Japan's consumer price inflation stood at 0.7 percent year-on-year in June of 2018, unchanged from the previous month and below market consensus of 0.8 percent. Food inflation hit its lowest since a deflation in last November while cost of transport rose at a faster pace and cost of housing continued to fall.

In June, prices of food increased by 0.4 percent year-on-year, slower than a 0.8 percent rise in May. It was the lowest food inflation since a deflation in last November, as cost rose less for fish and seafood (3.2 percent from 3.5 percent); and dairy product and eggs (2.9 percent from 3 percent), while dropped for fresh food (-1.2 percent from -0.7 percent); and fresh fruits (-1.3 percent from 2.6 percent).

Meanwhile, cost went up at a faster pace for: transport & communication (1.4 percent from 1.3 percent); culture and recreation (0.8 percent, after a flat reading in May); fuel, light and water charges (3.3 percent from 3.1 percent) as cost of electricity increased by 3.1 percent, faster than a 3.3 percent rise in the prior month); miscellaneous (0.4 percent from 0.3 percent); medical care (2 percent from 1.9 percent); and education (0.5 percent from 0.3 percent). Cost of clothes and footwear was flat, following a 0.1 percent rise in a month earlier.

At the same time, cost continued to fall for housing (-0.1 percent from - 0.1 percent fall in May); and furniture and household utensils (-1 percent from -1.5 percent).

Core inflation rate, which excludes fresh food, rose to 0.8 percent from 0.7 percent in May and in line with estimates. It is the highest figure since March.

On a monthly basis, consumer prices went up by 0.1 percent, the same as in the prior month.




Thursday July 19 2018
Japan June Trade Surplus Larger than Expected
Ministry of Finance l Rida | rida@tradingeconomics.com

Japan's trade surplus widened 66.5 percent to JPY 721.4 billion in June of 2018 from JPY 433.2 billion a year earlier and far above markets estimates of a JPY 534.2 billion surplus.

In June, exports grew by 6.7 percent year-on-year to JPY 7,052 billion, following a 8.1 percent rise in the previous month and below expectations of  7 percent. Sales of transport equipment advanced 2.7 percent, mainly led by bus & trucks (11.3 percent), and those of machinery went up 8.4 percent, namely power generating machine (15.4 percent) and computers and units (8 percent). Also, exports rose for electrical machinery (8.1 percent), of which semiconductors (9 percent); others (2 percent), mainly driven by photographic supplies (2.9 percent); manufactured goods (9.5 percent), namely iron and steel products (7.2 percent) and non-ferrous metals (19.4 percent); and chemicals (11.6 percent), of which plastic materials (5.3 percent) and organic chemicals (6.2 percent).

Among major trading partners, sales to Asia rose 8.6 percent, mainly to China (11. percent), Taiwan (5.9 percent), Thailand (15 percent) and Singapore (2.9 percent), while those to Hong Kong (-0.6 percent), South Korea (-4.1 percent) fell. Also, exports went up to the Western European countries (5.4 percent), mainly Germany (14.5 percent); the EU countries (9.3 percent); the Middle East (6.5 percent); and Australia (18.7 percent). In contrast, sales to the US declined by 0.9 percent, the first drop in 17 months, amid worsening trade tensions, with shipments decreasing for cars (-12 percent), semiconductor manufacturing equipment (-40.2 percent) and aircraft (-10.4 percent).

Imports went up much softer at 2.5 percent to JPY 6,330 billion, after a 14 percent gain in May and missing consensus of a 5.3 percent rise. Purchases of mineral fuels rose by 9.3 percent, namely petroleum (20.2 percent), and those of others  expanded 2.4 percent), of which clothing and accessories (9.1 percent), and scientific, optical instruments (2 percent). In addition, imports went up for manufactured goods (9.4 percent), of which non-ferrous metals (23.1 percent), iron and steel products (2.3 percent) and manufactures of metals (6.2 percent); parts of motor vehicles (4.4 percent). Purchases of transport equipment increased 5 percent, namely motor vehicles (6.9 percent). On the other hand, imports of electrical machinery dropped by 1.7 percent, in particular semiconductors (-4.6 percent), and those of machinery decreased 4.1 percent, driven by computers and units (-20.1 percent). Also, purchases of chemicals decreased 0.5 percent, namely medical products (-11.2 percent). 

Inbound shipments increased from Asia (1.6 percent), mainly from South Korea (14.8 percent); and Thailand (8.3 percent), while declined from China (-0.6 percent); and Taiwan (-1.7 percent). Also, imports grew from the Western European countries (0.6 percent), mainly from Germany (5.6 percent), and Italy (23.6 percent); the EU countries (5.2 percent); and the Middle East (27 percent). In contrast, purchases from the US declined by 2.1 percent, mainly due to crude oil, aircraft, and coal. Also, imports from  Australia dropped by 9.1 percent.

Considering the first six months 2018, Japan's trade deficit narrowed to JPY 609.9 billion from JPY 1.02 trillion in the same period of the preceding year. 




Thursday June 28 2018
Japan Jobless Rate Lowest Since 1992
Statistics Japan l Rida | rida@tradingeconomics.com

The unemployment rate in Japan unexpectedly declined to 2.2 percent in May of 2018 from 2.5 percent in the previous month and below markets estimates of 2.5 percent. It is the lowest jobless rate since October 1992. Meanwhile, the jobs-to-applicants ratio edged up to 1.60 from 1.59 in April, slightly above expectations of 1.59 and reaching the highest figure since January 1974.

Compared to the preceding month, there were 1.51 million unemployed persons in May, 210 thousand less than in April. Employment fell by 20 thousand to 66.73 million, after a decrease of 10 thousand in a month earlier. The labour force decreased by 41 thousand to 68.21 million while those detached from the labour force went up 35 thousand to 42.70 million.

Among people aged 15 to 24 years old, the jobless rate dropped markedly to 3.4 percent from 3.8 percent in April.

A year earlier, unemployment was higher at 3.1 percent.


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.