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Japan – stepping back into Shirakawa's world

Japan – stepping back into Shirakawa's world

Former BOJ governor Shirakawa continues to argue Japan's problems are about demographics, not deflation. His thesis is worth studying, even if it is not shared by the current leadership in the bank.

8 min read

Region – the structural rise in wages

Region – the structural rise in wages

Not just in Japan but Taiwan too, there are signs of a structural break from persistently low wage inflation. The implication is that the gap between nominal monetary settings between both and the US is likely to be narrower in the future than it has been in the past.

5 min read

Japan – long- and short-term corporate sentiment

Japan – long- and short-term corporate sentiment

Two recent surveys from the Cabinet Office highlight Japan's labour market tightness. In its annual survey released at the end of February, hiring intentions are the highest since the 1990s. And today's quarterly survey shows worker shortages rose again from Q4.

3 min read

Japan – the good and bad of the GDP revision

Japan  – the good and bad of the GDP revision

It was no surprise that capex was revised up in the second release of Q4 data, but consumption was revised down. We would expect consumption to recover from here, as imported inflation eases and nominal wage growth accelerates.

3 min read

Japan – strong sentiment and wages, not consumption

Japan  – strong sentiment and wages, not consumption

Even more than the PMI, the EW survey points to Japan's cycle having decent momentum. There is upside risk around that, because consumption has yet to recover, while it looks like the shunto wage round will be strong. That is the backdrop for increasingly confident commentary from the BOJ.

4 min read

Japan – inflation stable, cycle firm

Japan  – inflation stable, cycle firm

Headline inflation in Tokyo in February rose from 1.8% YoY to 2.6%. So inflation isn't disappearing. But underlying measures don't suggest that inflation really is accelerating either, with core settling around 2% annualised. At the same time, the PMI shows services momentum remaining firm.

3 min read

Japan – stronger capex

Japan – stronger capex

The big bounce in capex in Q4 suggests an upwards revision for GDP, and if sustained, potentially better productivity growth. However, wage growth was soft, and as a result, there wasn't much reversal of the sharp fall in the labour share of Q3.

3 min read

Japan – consumer confidence up again

Japan – consumer confidence up again

Consumer confidence rose again in February, despite inflation expectations in the survey staying high. That hints at rising real wages. This makes a recovery in domestic consumption more likely, and if that occurs, the economy this year will be stronger this year than the BOJ expects.

3 min read

Japan - stable inflation

Japan - stable inflation

Headline CPI dropped in January to the lowest in a year. Sequential core also continues to ease. That, however, remains above 2%, and our calculations of the BOJ's measures of underlying CPI ticked up in January. Overall, inflation looks stable, but with the one caveat of the drop in services PPI.

2 min read