Japan Real Time Charts and Data

Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Japan related comment. He also maintains a collection of constantly updated Japan data charts with short updates on a Storify dedicated page Is Japan Once More Back in Deflation?

Tuesday, September 30, 2008

Japan - While Consumer Inflation Falters, Wages Fall and Industrial Output Plummets

Japan seems to be really racking up a series of economic issues which lead me to think that this recession we are now entering which be neither short lived nor "light". Inflation continues to make its presence felt in a way which is not exactly disastrous after years of deflation, but which does mean that downward pressure on wages as the economy slows pushes consumption back, and that is just what we are seeing in retail sales which barely rose in August, in nominal (non inflation adjusted) terms, and thus fell in real terms. At the same time exports barely increased year on year in August, while industrial output fell back strongly. Rather unsurprisingly given all this the Tankan business confidence index hit its lowest level in 5 years.

Consumer Price Rises Start to Slow

Japan's consumer-price inflation rose at a 2 percent plus rate for the second consecutive month in August as Japanese companies passed on costs of food and other daily necessities to consumers who are seeing increasing pressure on their wage packets and purchasing power. Core prices, which exclude fresh food, were up 2.4 percent in August from a year earlier, the same pace as July, according to the latest data from the statistics bureau. Excluding food and energy (ie the core-core index), prices were unchanged in August from a year earlier after increasing 0.2 percent in July, so it is quite likely that inflation is now on its way out of the system as oil and food prices fall back further.

Unemployment Rises

Japan's unemployment rate rose to 4.2 percent in August, the highest in two years, and households cut spending, signaling consumers are unlikely to support the faltering economy. The jobless rate was up from 4 percent in July. The ratio of jobs available to each applicant fell for a seventh month to 0.86, the lowest since September 2004, the Labor Ministry said today. So labour market conditions are definitely worsening.

Wages Down

Japan's real (inflation adjusted) wages dropped (by 2.8% year on year) for the fifth consecutive month in August, and even nominal eages fell for the first time this year, suggesting that households will be more likely to cut than increase spending. Monthly wages, including overtime and bonuses, fell 0.3 percent to 283,473 yen ($2,699) from a year earlier, after a 0.3 percent gain in July, according to data from the Labor Ministry.

Household spending fell 4 percent from a year earlier, the sixth straight month of decline.

Retail Sales Up Slightly

Growth in Japan's retail sales slowed in August as the higher prices of daily necessities seem to have discouraged consumers from spending. Sales were up 0.7 percent from a year earlier after rising a revised 2 percent in July, according to data from the Trade Ministry.

Industrial Output Falls

Japan’s industrial production fell sharply in August, dropping by 6.9 per cent year-on-year and 3.5 per cent month-on-month, the largest decline since January, 2001, highlighting the downturn in export-oriented industries.

Exports Fall Back In August

Japan's export growth slowed in August, led by a record drop in shipments to the U.S.. Japanese exports grew by just 0.3 percent from a year earlier, following an 8 percent rise in July. The

A drop in demand for Japan's exports, which are the main driver of Japanese economic growth is having a signicant impact on an economy already suffering from weak consumer spending at home.

Japan even had a trade deficit - 324 billion yen ($3 billion) - the first since January, due ot the impact of record oil imports. Imports were up 17 percent from a year earlier.

Shipments to the U.S. were down 21.8 percent year on year in August, the biggest decline on record, and exports to Europe fell 3.5 percent. A weakening in overseas demand lead the Japanese economy to shrink at an annualized 3 percent rate last quarter.

Even export growth to the newly emerging economies has slowed, as central bank after central bank has raised interest rates in an attempt to contain inflation.

Aso Says Consumption Tax Rise "Unavoidable"

Prime Minister Taro Aso said today that raising Japan's consumption tax is unavoidable, although doing so immediately would be difficult given current economic conditions. Speaking to the Japanese parliament he said:

"We cannot avoid discussions on (raising) the consumption tax, but it is difficult under current economic conditions,"

Given the fact that Japan's debt to GDP ratio is estimated by the OECD at 182% of GDP in 2008 he could hardly say otherwise really, since Japan needs to tread very carefully with any backsliding on the commitment to balance the budget in 2011, on the other hand this does make for a very tight corner situation with the economy slowing as it is.

Tankan Down

And as if to ram the message finally straight home Japanese businesses showed themselves to be generally pessimistic about their prospects for the first time in five years, according to the Bank of Japan’s September Tankan survey, which underscored the impact of the global downturn on business sentiment. The widely followed Tankan survey for the three months to September showed sentiment among large manufacturers deteriorated for the fourth quarter in a row and was negative for the first time since 2003.

The Tankan index of confidence among large manufacturers fell to minus 3, turning negative for the first time since June 2003 when the index fell to minus 5. Sentiment among large non-manufacturers, small manufacturers and small non-manufacturers was equally depressed with the index for each group showing the worst reading since 2003.

Auto Sales Slump

Japan's auto sales slumped to the lowest in 34 years in the first half of this fiscal year. Sales in the six months through September fell 2.9 percent to 1.54 million vehicles, the lowest since 1974, the Japan Automobile Dealers Association said in a statement today. The total excludes minicars. Sales of cars, trucks and buses in September fell 5.3 percent to 310,992 from a year earlier.

Also Japan, which is the world's third-largest oil consumer, sawgasoline demand fall in August by the most for the month since 1953 as prices climbed to a record. Domestic gasoline sales totaled 4.69 million kiloliters in August, a 14 percent decline from a year earlier, according to the Ministry of Economy, Trade and Industry. That's the largest year-on-year decline for the month since the government started compiling data 55 years ago.