The trade surplus fell 11.9 percent in March from the same month a year earlier to 978.1 billion yen ($8.34 billion), Ministry of Finance data showed on Thursday. Still, the surplus exceeded the median market forecast by 35 percent.
Exports rose 18.1 percent from a year earlier, marking the fifth consecutive month of double-digit rises, to a record 6.8195 trillion yen, helped by vehicle shipments to the United States.
Overall, U.S.-bound exports rose 16.4 percent compared with a year earlier, while exports to China, Japan’s biggest trading partner, jumped 32.4 percent on higher shipments of automobile parts and semiconductor products.
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?
Thursday, April 20, 2006
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 global slowdown will affect exports, and thus raise issues about the sustainability of internal demand and the growing import dependence. The 34% jump in exports to China should also draw attention to the way in which Japan is benefiting from Chinese growth, and serve to put Japan's own performance in somewhat better perspective.
Monday, April 03, 2006
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 also face the worst staff shortages since around that time, according to the Bank of Japan’s Tankan survey."
This should really hardly be surprising, since with a stagnant and ageing population I am not sure where people imagined all the extra labour that was needed to sustain the recovery was going to come from.
The survey’s capacity index for large manufacturers - a measure of whether they have enough plant - swung from plus 2 in December 2005 to minus 1 in Monday’s March survey. This was the first negative figure since 1991. The Bank subtracts the percentage of companies complaining of insufficient capacity from the percentage reporting excessive capacity.
The survey’s economy-wide employment index - excessive employment minus insufficient employment - fell three points to a 14-year low of minus 7.
Signs of labour shortages tally with government employment figures announced on Friday, which showed a fall in the unemployment rate to an eight-year low, and a rise in the jobs-to-applicants rate to a 14-year high.
This labour market tightening would seem to have three logical outcomes.
Firtsly a growing inflationary pressure inside Japan (viz the FTs comment that "The gaps ......strengthen the case among the hawks at the central bank who want to end the BoJ’s zero interest rate policy as soon as possible to forestall inflation).
Secondly, a growing pressure on the trade balance from the increasing introduction of more competitively priced imports.
Thirdly, and outsourcing drive in search of more abundant labour (or lets move to China):
Japanese companies are turning to China as a manufacturing base to benefit from low labour costs, but are also relying increasingly on the burgeoning Chinese consumer market as a destination for exports as well as goods produced in China.
Japan’s economic recovery is still largely export-based and continued Chinese buying is acknowledged by policy-makers as a key component in ensuring the recovery is sustainable, despite occasional political tensions.
"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 also face the worst staff shortages since around that time, according to the Bank of Japan’s Tankan survey."
This should really hardly be surprising, since with a stagnant and ageing population I am not sure where people imagined all the extra labour that was needed to sustain the recovery was going to come from.
The survey’s capacity index for large manufacturers - a measure of whether they have enough plant - swung from plus 2 in December 2005 to minus 1 in Monday’s March survey. This was the first negative figure since 1991. The Bank subtracts the percentage of companies complaining of insufficient capacity from the percentage reporting excessive capacity.
The survey’s economy-wide employment index - excessive employment minus insufficient employment - fell three points to a 14-year low of minus 7.
Signs of labour shortages tally with government employment figures announced on Friday, which showed a fall in the unemployment rate to an eight-year low, and a rise in the jobs-to-applicants rate to a 14-year high.
This labour market tightening would seem to have three logical outcomes.
Firtsly a growing inflationary pressure inside Japan (viz the FTs comment that "The gaps ......strengthen the case among the hawks at the central bank who want to end the BoJ’s zero interest rate policy as soon as possible to forestall inflation).
Secondly, a growing pressure on the trade balance from the increasing introduction of more competitively priced imports.
Thirdly, and outsourcing drive in search of more abundant labour (or lets move to China):
Japanese companies are turning to China as a manufacturing base to benefit from low labour costs, but are also relying increasingly on the burgeoning Chinese consumer market as a destination for exports as well as goods produced in China.
Japan’s economic recovery is still largely export-based and continued Chinese buying is acknowledged by policy-makers as a key component in ensuring the recovery is sustainable, despite occasional political tensions.
Thursday, March 09, 2006
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 few months” to bring massive levels of liquidity back down to levels consistent with keeping overnight rates at zero.
The shift ends five years of quantitative easing brought in to save the economy from falling into a deflationary spiral and to help prop up the bad debt-burdened financial system.
Ending the framework is a declaration that the economy has returned to normal and that, in the bank’s opinion, there is virtually no danger of slipping back into deflation
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 few months” to bring massive levels of liquidity back down to levels consistent with keeping overnight rates at zero.
The shift ends five years of quantitative easing brought in to save the economy from falling into a deflationary spiral and to help prop up the bad debt-burdened financial system.
Ending the framework is a declaration that the economy has returned to normal and that, in the bank’s opinion, there is virtually no danger of slipping back into deflation
Wednesday, March 08, 2006
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, growth is strong, deflation is vanishing and confidence is returning. Is this then the reward for Junichiro Koizumi's reforms? "Exactly the opposite" is the answer. If the prime minister had done what he initially proposed – pursue structural reform and cut fiscal deficits – the result would have been a catastrophe. Fortunately, wiser counsels prevailed.
In what way then is this an unreformed Japanese economy? It is still a Japan whose growth depends heavily on exports and investment, whose private sector saves far more than it can profitably invest at home and whose corporations waste capital. Japan is not recovering because it has a brand new economy: what has been achieved is a partial clean-up of the legacy of the bubble years.
As Martin Wolfe also points out:
Between the fourth quarter of 2001 (the last deep trough in gross domestic product) and the fourth quarter of last year, the economy expanded by 9.9 per cent, in real terms. Net exports generated an astonishing 30 per cent of the increase in demand, investment 18 per cent and government consumption a further 14 per cent. Private consumption generated a mere 39 per cent of the increase in demand.
The sharp improvement in net exports had two principal explanations: the depreciation of the real exchange rate; and China’s demand for Japanese technology. Between December 1999 and February of this year, Japan’s real broad exchange rate depreciated by almost 30 per cent, according to JP Morgan. This was not an accident: Japan’s foreign currency reserves rose by $547bn between December 1999 and the end of last year. Meanwhile, exports to China accounted for 30 per cent of the increase in Japan’s total exports between 2001 and 2005.
Japan has, in short, continued to derive much of its dynamism from external demand. It also continues to rely heavily on corporate investment. That may not seem surprising until one realises how overcapitalised the economy is by global standards.
The share of Japanese corporate investment in GDP is far higher than in other high-income countries (see chart). Most recently, it has been 40 per cent higher than in Germany or the US.
Overall, investment ran at 24 per cent of GDP in 2004. That such high investment has generated little growth in the recent past (and is expected to generate little growth in future) is evident. But what would have happened without it? Without some other offset, the result would have been not stagnation, but a depression.
Today’s new Japan is essentially the old Japan. It continues to rely on competitive exports, a sizeable current account surplus and wasteful use of its people’s savings to keep demand expanding in line with its disappointing potential rate of growth.
Japan is back. After almost one and a half decades of disappointment, growth is strong, deflation is vanishing and confidence is returning. Is this then the reward for Junichiro Koizumi's reforms? "Exactly the opposite" is the answer. If the prime minister had done what he initially proposed – pursue structural reform and cut fiscal deficits – the result would have been a catastrophe. Fortunately, wiser counsels prevailed.
In what way then is this an unreformed Japanese economy? It is still a Japan whose growth depends heavily on exports and investment, whose private sector saves far more than it can profitably invest at home and whose corporations waste capital. Japan is not recovering because it has a brand new economy: what has been achieved is a partial clean-up of the legacy of the bubble years.
As Martin Wolfe also points out:
Between the fourth quarter of 2001 (the last deep trough in gross domestic product) and the fourth quarter of last year, the economy expanded by 9.9 per cent, in real terms. Net exports generated an astonishing 30 per cent of the increase in demand, investment 18 per cent and government consumption a further 14 per cent. Private consumption generated a mere 39 per cent of the increase in demand.
The sharp improvement in net exports had two principal explanations: the depreciation of the real exchange rate; and China’s demand for Japanese technology. Between December 1999 and February of this year, Japan’s real broad exchange rate depreciated by almost 30 per cent, according to JP Morgan. This was not an accident: Japan’s foreign currency reserves rose by $547bn between December 1999 and the end of last year. Meanwhile, exports to China accounted for 30 per cent of the increase in Japan’s total exports between 2001 and 2005.
Japan has, in short, continued to derive much of its dynamism from external demand. It also continues to rely heavily on corporate investment. That may not seem surprising until one realises how overcapitalised the economy is by global standards.
The share of Japanese corporate investment in GDP is far higher than in other high-income countries (see chart). Most recently, it has been 40 per cent higher than in Germany or the US.
Overall, investment ran at 24 per cent of GDP in 2004. That such high investment has generated little growth in the recent past (and is expected to generate little growth in future) is evident. But what would have happened without it? Without some other offset, the result would have been not stagnation, but a depression.
Today’s new Japan is essentially the old Japan. It continues to rely on competitive exports, a sizeable current account surplus and wasteful use of its people’s savings to keep demand expanding in line with its disappointing potential rate of growth.
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