Finally Some Good News from Japan?

(cross-post from Alpha.Sources)On the back of a miserable Q2 GDP reading and general uncertainty in markets Japan's economy has not exactly been the harbinger of pleasant data reading as of late unless of course you have been short on the Yen. As I said in a recent small post on Japan Economy Watch this week would bring some pretty interesting data releases from Japan in terms of figures for

Japan Retail Sales August 2007

METI have just released the latest retail sales data. The yen value of both retail sales and sales at large stores actually fell from July, although total retail sales did manage to eke out a small 0.5% increase year on year, which was notable since in 9 of the previous 10 months they have actually been down even year on year.

Japan Industrial Output August 2007

Well industrial output was certainly up in Japan in August.Japan's industrial output surged at the fastest pace in almost four years....Production rose 3.4 percent from July to a record, the Ministry of Economy, Trade and Industry said in Tokyo today.As I say, the August numbers certainly shot up. The question is what to make of this reading. Claus is preparing a fuller analysis even as I post

Japan Employment and Unemployment August 2007

Well, as reported in the Financial Times today, Japanese unemployment crept up slightly last month:Japan’s jobless rate rose for the first time in 11 months as more people sought work, underlining concerns about the slow pace at which economic growth has translated into higher wages.The unemployment rate rose 0.2 point to 3.8 per cent in August, while the job to job-seekers ratio deteriorated

Raising Consumption Taxes To Finance Pensions?

According to reuters today:Japan may finance its basic pension scheme through a rise in its consumption tax, a senior official from the ruling party said on Thursday."We are not going to resort to using the sales tax from the beginning, but in the end I think we will conclude that it's best to finance the pension scheme with the sales tax," said Sadakazu Tanigaki, the Liberal Democratic Party's

Japan Trade Surplus August 2007

Well as Claus forecast in his last post, I have indeed been preparing something on the last trade figures. First off, the headline numbers.Japan's August trade surplus widened to 743.2 billion yen ($6.5 billion). On an annual basis exports rose at more than twice the pace of imports, according to the latest data released by the Finance Ministry today. The surplus has nearly quadrupled - and

On We Go?

Well, I know that Edward is already preparing something on today's reading on the Japanese surplus which seems to be muddling along just fine even in the midst of ever more uncertain global economic conditions. The question is of course whether this will continue?Meanwhile, Bloomberg also looks forward this morning to a slew of data due at the end of the week. And the predictions?On inflation the

No Hike in Sight at the BOJ

(Cross-post from Alpha.Sources)As Bernanke chooses to cut 50 basis points and as economic growth is visibly slowing in Europe and even contracting in Japan I don't think many of us expected the BOJ to raise rates. As such, Fukui and his colleagues duly chose to stand firm yet again yesterday as the economy contracted in Q2 2007 and remained mired in deflation. In this way it indeed seems as if

Japan Services Activity Down In July

Demand for services in Japan fell in July (slightly).The tertiary index, which is a gauge of money households and businesses spend on services ranging from phone calls to leisure, slipped 0.5 percent from June, according to data from the Trade Ministry released this morning. This data point is significant since services these days form such an important part of domestic consumption (Actually,

Catch-22...Japanese-style

A Google search very quickly turned up an article by William Pesek Jr. from the International Herald Tribune which states that "roughly 96 percent of Japan's government securities are held domestically, enabling officials to avoid capital flight even as they sell mountains of debt." This is a very important factor to consider when reviewing the data and commentary that Edward and Claus have

Japanese Appetite For US Bonds On The Rise?

Japanese investors bought more foreign bonds in net terms last week than at any time in the last two years. The appetite for US bonds seems to have been boosted, rather than deterred, by increasing expectations of a cut in the US benchmark interest rate.This would seem to be for the rather perverse reason that if the Fed have to lower interest rates this is probably an indication that the US

Moody's Don't Miss A Shot

Following all the stick that they have taken over the sub prime scandal, one should now expect the ratings agencies to use the vocabulary of "strong vigilance" in connection with those sovereign debts whose scale defy the limits of credulity, especially Italy and Japan. Hence, with all the uncertainty surrounding policy direction following Abe's departure (and see the last post for some

Richard Katz in the FT

Japan economy expert Richard Katz had an op-ed in the Financial Times earlier this week which is well worth reading in its entirety. Here I will just pick out one or two points:Firstly he argues most cogently that Japan has not in any meaningful way "decoupled" from the US."Despite talk that Japan has “decoupled” from the US economy, the opposite is the case. The turbulence in Japan’s financial

Japan Consumer Confidence Index August 2007

The Cabinet Office today released the August consumer confidence survey results. I think they speak for themselves. Here's the general index:and here are the various sub-components:Of course, could it be any coincidence that all of this is announced on just the day that Abe decides to resign?

The Ratings Agencies and Japan Government Debt

As explained here, with outstanding Japan government debt variously estimated to be somewhere in the region of 150% of GDP, and structural liabilities growing as Japan's population ages rapidly, the fiscal situation in Japan has to be a matter of growing concern. In particular given the recent severe criticism that has been leveled against the ratings agencies, we can increasingly expect them to

Machinery Orders Fall in July

Yes, that's right, fall. This isn't the impression you would get from reading Bloomberg though:Japan's machinery orders surged in July at three times the pace forecast by economists, easing concern the economy will contract for a second quarter.Orders climbed a seasonally adjusted 17 percent to 1.12 trillion yen ($9.9 billion) from June, the Cabinet Office said in Tokyo today. The gain was led by

Yen vs Dollar: recent trend

Here is a chart produced by Yahoo Finance of the dollar-yen exchange rate:This would seem to reinforce Claus's assertion that the BoJ will do nothing with interest rates, as that would only exacerbate the strengthening of the yen versus the dollar. Given that the export sector is supporting Japan's GDP, Japanese officials aren't going to want to touch anything that would damage exports with a

Japan Contracts in Q2

(cross-post from Alpha.Sources)I see not reasons to mince my words on this one with the recent stark downward revision of Japanese GDP in Q2. (From Bloomberg) Japan's economy contracted at almost twice the pace forecast by analysts in the second quarter, reinforcing speculation the central bank will leave interest rates unchanged this year. The economy shrank at a 1.2 percent annual

GDP Q2 2007 Downward Revisions

"Is Japan Heading for a Recession?" Claus asks us in his last post, and the answer looking at the latest set of GDP revisions may well be yes.Japan’s economy shrank more sharply than expected in the second quarter, and revised growth domestic product data released today show an annualised contraction of 1.2 per cent. In general we had been expecting a downward revision following evidence last

Is Japan Heading for a Recession?

By Claus VistesenWhile financial markets are gazing firmly towards the US economy shadowing Ben Bernanke's every word and gesture for a hint of future rate decisions economic fundamentals in Japan are trending firmly and steadily downwards into worrisome territory. At this point however the headline chosen for this entry might still seem rather alarmist but given the nature of lag of economic

Japan July 2007 Wages

Japanese monthly wages, including overtime pay and bonuses, dropped 1.9 percent in July, the eighth monthly decline and the fastest pace in three years according to the Labor Ministry in Tokyo today.This development in Japanese wages is by no means new, as can be seen from this chart for annual changes over the last 4 years. In fact total earnings went down in both 2003 and 2004:Comment The

Investment In Plant and Equipment Q2 2007

Corporate investment in Japan declined in the second quarter of 2007 following a sharp fall in spending in the predominantly domestically focused non-manufacturing sector. According to data released by the Ministry of Finance in Tokyo today, capital spending sank 4.9 percent in the three months ended June 30 after advancing 13.6 percent in the first quarter. Here's the chart.We can also see that