Doubts Continue About Japanese Consumption

The Japanese Cabinet Office have just released another report on the state of the Japanese economy. Unsurprisingly they one more time draw attention to the lacklustre state of Japanese domestic consumption:the report, which looks at a variety of economic factors besides gross domestic product, warned of weakness in consumer spending, saying sluggish growth in wages was keeping spending

Surplus Widens in Japan

(Cross post from Alpha.Sources)The November data on Japan's trade is out and Bloomberg reports how the surplus has widened on the back of accelerating exports and a low yen. Japan's export growth unexpectedly accelerated in November, easing concern that the expansion of the world's second-largest economy is cooling. Imports slowed, reflecting a decline in oil prices. Exports rose 12.1

Japan: Fiscal Tightening Ahead

Koji Omi, Japan's finance minister, claimed yesterday that the gross domestic product deflator - an important measure of deflation - would turn positive in the year to March 2008 for the first time in a decade:“The GDP deflator for the current fiscal year was minus 0.4 per cent, and that will become plus 0.2 per cent in fiscal 2007/08,” he said. “That shows the economy will become normal.”Not

No Change At The Bank of Japan

Unsurprisingly, the Bank of Japan kept interest rates unchanged yesterday.The decision was unanimous. . Obviously that now opens the question as to whether they will in fact ever (in the short run I mean) be able to get round to raising. It depends on the external environment, and how much exporting they will be able to do in Q1 2007, I guess. But still they won't be going very far. Bonds rose

Adjusting the Views on Japan?

(Cross-post from Alpha.Sources)In my comments on Japan here at AS I have consistently advocated a rather pessimist discourse on the economy primarily driven by my belief that the economy is in a structural bind with a continuing downward trend in consumer spending regardless of the how well the corporate sector (i.e. the export sector) fairs. In short, I do not see Japan returning to a balanced

Japanese Growth Revisited

This article on the recent downward revision of Japanese growth is a bit old now, but it does contain a few useful points:Japan's economy grew at a far weaker pace in the third quarter than previously reported due to downward revisions in consumer spending and capital investment, the government said Friday, raising concerns about the recovery's strength. Gross domestic product expanded at an

December Tankan Index

Well the latest edition of the Bank of Japan’s Tankan survey is now public property, and it does register a marginal increase to 25 from 24 last time. Perhaps just as significantly though the companies surveyed expect the index to decline to 22 next time round, which means that the forward looking component is not overly strong.Perhaps the most noteworthy point in the FT article was this one:"

In(de)flation in Japan?

(Cross post from Alpha.Sources) I actually have a link to this in the post below but I still believe it deserves attention above the fold. On the back of this I would really like to hear anybody arguing the BOJ to raise any time soon.(From Bloomberg) Japanese inflation unexpectedly slowed in October as oil prices dropped, dashing expectations that the central bank will raise the lowest

Japan is Getting Interesting

(Cross post from Alpha.Sources) As regular readers of Alpha.Sources will know I have become quite fond of 'Japan-watching' as a discipline and as the pundits' commentaries and general economic data keep coming in I must say that it is getting exceedingly more interesting. Clearly, I have an impetus here and in essence I feel that I am on to something and I will keep poking and scratching

What's Funny About Consumption in Japan?

This question was being asked yesterday by Morgan Stanley GEF analyst Robert Alan Feldman (the post can be found towards the bottom of the page).Now as Claus Vistesen will undoubtedly hammer home at some stage Feldman does get some important parts of the picture which I have referred to in my last posts (and here):The data on consumption have certainly been a disappointment this year. Although

Consumption Decline in Japan

My friend Eddie Lee mailed me this morning about this news: Japan's retail sales unexpectedly fell for a second month, reducing the likelihood that consumer spending will accelerate and lead to an increase in the lowest interest rates among the world's seven biggest economies.Receipts at retailers fell a seasonally adjusted 0.2 percent in October from a month earlier amid warmer-than-usual

The Fiscal Position In Japan

Glancing through the OECD Japan Economic Survey 2006 section on the Japan's current fiscal position, I couldn't help having some inconvenient thoughts.Now as explained here, societies with high median ages and large fiscal deficits (like Japan, Germany and Italy) really face a very special problem: they need to generate sufficient economic growth on a sustainable basis (and since with high median

Checking up on Japan

(A crosspost from Alpha.Sources.)Time is indeed a scare ressource and as such I have not been on the spot with some reporting on Japan as the third quarter came out a week ago. This is consequently to make amends on that but also to react on some interesting comments on Japan I have found in the week gone by. Let us begin with the economic data then and to that end Edward Hugh really has the all

The Japan Government Reduces Its Economic Forecast

In many ways this is significant. The Japanese government has just reduced its economic forecast for the first time since December 2004. So it seems that now all the signs are there that the longest economic expansion since the great recession began is now begining to come to an end. Foremost among the weak points is, of cousre, domestic consumption. Rather than repeating myself for the umpteemth

Japan Trade Surplus Narrows

This is hard to interpret, but it does seem that we have here more evidence of an investment slowdown in China (as well of course of a decrease of the rate of growth in US consumption), and Japan is one of the first to feel all of this. Now we have to watch for Germany. Note that many commentators are asking for domestic consumption to take the strain, and that doesn't sound at all realistic to

The Japanese Yen

One of the important features of the current Japanese export driven 'recovery' is the relatively low (indeed vis-a-vis the euro historically low) value of the yen. Surprisingly few commentators have seen fit to comment on this, or on the significance it might have for the debate about whether or not Japan is finally escaping the deflation problem. In the days when people still used to talk about

Japanese Third Quarter GDP

Well Japanese GDP maintained its momentum in the third quarter according to the initial data released today:Japan grew more strongly than expected in the third quarter with strong exports more than offsetting weak domestic consumption to produce annualized growth of 2 per cent......The economy, which grew a revised 1.5 per cent in the second-quarter on an annualized basis, has been expanding for

Right and Wrong on Japan?

This is a cross-post from my own blog Alpha.Sources in which I argue that any economic analysis of Japan must begin with the demographics. I am no fundamentalist but it seems very clear to me that any economic analyses on Japan which do not take the time to look at the structural effect of the demographics on the economy are not worth much I am sad to say.---We are now ready to another trip

Japan: Good News or Bad?

The presentation of the latest set of industrial production figures from Japan is interesting. The consensus is basically upbeat (and here). But read between the lines and things aren't so clear. And if you look at my post here, Japan certainly seems to have been slowing for the best part of a year now.As Bloomberg have it:Japan's industrial output rose to a record last month and inflation

Japan: Bulls or Elephants?

Lex has a column on Japan in the FT today. Basically it reflects the growing attention which is likely to be focused on Japan's fiscal situation. One interesting point which can be seen in the graphic he provides is the fact that Japan seems to have peaked in early 2005. This may be the longest running expansion Japan has had in many a long year, but we definitely seem to be in the downswing at

Once More On The Yen ...

Here's another guest post from Danish Blogger Claus Vistesen:Once More On The Yen ... Talk Is In Fact CheapSome days ago I reported on how policy makers at the G8 summit in Skt Petersbourg were trying to talk up Yen in the midst of the recent weakening of the currency relative to the Dollar and Euro. The Japanese Finance Minister called the recent drop in the Yen a 'little rough' whereas others

Japan's Trade Surplus

The recent drop in oil prices and the low value of the Yen seem to be sending Japan's trade balance once more spiralling into surplus:Japan’s trade surplus rose nearly 100 per cent in August, showing that net exports were still contributing to overall economic growth and that the effects of high oil prices were slowly waning.Although the leap was smaller than expected, economists said the numbers

Japan, At Last Some Sense

This article about the extent to which the Japanese treasury is dependent on company profits for income is interesting, but beyond that I'm not sure how to interpret the fact since I am not sufficiently knowledgeable about the Japanese fiscal system.However, a number of points do stand out. Corporate profits now fund the revenue:Japanese corporate profit tax receipts are poised to overtake

Crunchtime in Japan?

Here's another guest post from Danish Blogger Claus Vistesen:Crunchtime in Japan?Well I have pointed to this several times and most recently as the CPI index was revised bringing Japan dangerously close to the 0% inflation mark amidst talks of business cycles topping and whether the BOJ should indeed raise rates any further. This is of course very unlikely now and the future road for Japan might

Japan Machinery Orders Slump

Wow, get this from Bloomberg today:Japan's Machinery Orders Drop Most in Almost 20 Years Japan's machine orders fell the most in almost 20 years, dashing expectations that the central bank will raise interest rates before the end of the year.Non-government orders excluding shipping and utilities dropped a seasonally adjusted 16.7 percent in July from a month earlier, the largest slide since

Yen Up, Yen Down

This one in Bloomberg brought a smile to my face:Yen Jumps After Mirow Says IMF to Discuss Currency's Weakness The yen jumped after German Deputy Finance Minister Thomas Mirow said the currency's weakness will be discussed when finance ministers and central bank governors meet in Singapore next week.``The yen has clearly weakened against the dollar but also against the euro, and in so far this

Dooming and Glooming about Japan

And now for something completely different, a guest post from Danish Blogger Claus Vistesen:Dooming and Glooming about Japan ... Is it too much?It has been a while since I have reported on the excellent writings of the Economist's weekly column Buttonwood about economic and financial markets. And before we get into the actual topic I would like to offer my humble advice to the editors of the

The Japanese Labour Force

The Japanese labour force has risen for the first time in eight years as women and those over 60 are drawn back to the jobs market in a sign of the strength of Japan’s cyclical recovery, now in its fifth year.The willingness of those who left the jobs market to re-enter also shows the mechanisms by which the labour market might respond to the challenges of an ageing society, which is shrinking

Japan A Suitable Place For Children?

The Japanese newspaper Asahi this weekend published the results of a survey carried out on behalf of the Japenese cabinet office into attitudes towards having children in Japan, South Korea, France, Sweden and the US.Whereas in Europe and the United States respondents tended to indicate they expected to have all the children they wanted, of those Japanese interviewed who said that they want to

Mild Deflation Persists

The yen fell yesterday against the dollar after Chief Cabinet Secretary Shinzo Abe and internal affairs minister Heizo Takenaka both stated that mild deflation persists in Japan. Commentators are speculating that the government may be just trying to delay an earlier end of the BOJ's zero-rates policy, but accept that there is some truth the pace and degree of the forceast increase in prices is

Better, or Worse-Off?

Most people in Japan seem to think that their living standards have deteriorated under Koizumi. That is the surprise finding in the latest Asahi survey. Apart from his commment that "Japan's economy is on solid ground and deflation in its last throes" (which I don't fopr one moment accept), he makes some worthwhile points:A funny thing is happening on the road to applying ``Reaganomics'' to

Japanese Trade

Japan's long term economic surplus continues to weaken, it is down by 11.9% year on year. Of course the main culprit is the rising cost of oil imports (on which Japan is heavily dependent). Exports rose 18.1 percent, but imports rose 25.2 percent to a record 5.8414 trillion yen, continuing a string of double-digit rises since April 2005.It is this part of the process we need to watch, as any

Japanese Labour Market: Running on Half-Empty?

Well, things certainly have been moving quite quickly in Japan recently. The recovery seems to have just started to gain some traction, and now we are being told that internal capacity limits may be being reached due to the presence oF labour shortages:"Japan’s large manufacturers are short of capacity for the first time since the bubble era of the early 1990s, while employers across the country

D Day is Here

Well, not quite, since they aren't actually thinking of raising interest rates anytime soon, but...... ultra loose monetary policy is over (for the time being). Now we get to see what happens next:The Bank of Japan on Thursday asserted its independence by ending an unorthodox ultra-loose monetary policy and shifting to a policy of targeting the overnight call rate.The bank said it would take “a

Japan: D Day Approaching?

Well there is a lot of attention being focused on the 2 day meeting of the Bank of japan which started today. Will tomorrow be Decision Day? Certainly the equity markets are nervous. Dave Altig at MacroBlog had a timely post yesterday about some of the possible pitfalls ahead, and Martin Wolfe has a piece on Japan in today's FT:Japan is back. After almost one and a half decades of disappointment,

More On The Japanese Recovery

The FT has a fairly balanced editorial this morning on Japanese monetary policy and on the potential pitfalls of an over-rapid tightening policy:"There is no need to hurry normalisation. Japan's real economy is in increasingly good health. But the exit from deflation remains recent and tentative. The BoJ's focus on its definition of core inflation - which does not exclude energy prices -

On The Japanese Trade Deficit

I'm trying to think about the implications of the economic fundamentals driving Japan's 'sustainable recovery'. What we know is that as the population ages the labour market is tightening. This is pushing up wages but not productivity. There is a consequential 'bounce' in domestic consumption. But what happpens next?Well my native economic wits tell me that the relative prices of Japanese imports

Japan Back With The Leaders?

The FT's David Turner had this incredible article in the FT over the weekend (behind the great firewall I'm afraid):Growth puts Japan back with the leadersUnexpectedly strong growth in the last quarter propelled Japan's economy once again into being a world leader, promising an end to 15 years in the doldrums when periodic economic revivals dissolved into false dawns.The world's second biggest

Could This Be The Reason?

As noted in the last post, there has been a noteable movement of foreign investors out of Japan in the last week. Today we have news of a draconian report from the Japanese government Council on Economic and Fiscal Policy which indicates the country either needs major spending cuts or a sharp rise in taxes. When you couple this with the possibility of a steady rise in interest rates and the fact

Japan's Growth Spurt

Well the Japanese economy is certainly ticking along at a very lively clip: an annualised rate of 5.5% in the last quarter of last year. Quite something when you compare it to the somewhat meagre showing of the US economy ver the same period (1.1%). So should we draw the conclusion that the Japanese economy is in better underlying shape than the US one? I doubt it.First of all, there is the nice

Japan, Japan, Wherefore Art Thou?

Hi everyone. Just to say that I have been a bit erratic recently since I have had a lot of work on my plate, and a lot of concentration to be doing. I hope sometime soon I will have some results from this to show here.Meanwhile the Japanese economy has been far from idle. Japans labour market continues to tighten:The closely watched jobs-to-applicants ratio rose to 1.00 in December - meaning

Tokyo Stock Exchange Temporarily Closed

Gosh, I certainly hope this isn't anything too serious:Japanese stocks plunged on Wednesday after the Tokyo Stock Exchange announced that it would suspend trading of all stocks because volumes were too high. The news panicked investors, who had already sent the Nikkei down heavily in the wake of Monday evening’s government raid on Livedoor, the internet services company, over possible violation

Japan: The Third Way?

As its population ages, Japan should carve out a middle way between the social security systems of Scandinavia and that of the US, this at least is the opinion of finance minister Sadakazu Tanigaki, one of several contenders to replace Junichiro Koizumi as prime minister.At the moment, benefits and tax payments were out of kilter ..“Japanese people are enjoying excessive benefits with a low [tax