Unlike China where the economy seems to have slowed and to be struggling from weakening demand and debt, the Japanese economy is positively bloomy.
Unemployment is at multi decade lows, retail sales have perked up, especially in department stores (even though household spending generally has weakened a little), exports are on the improve and the outlook is for more of the same.
Inflation is at last positive – but still well short of the Bank of Japan’s 2% target and will remain so because wage growth is also weak.
Yesterday another key indicator, industrial production for April revealed a bounce back from a sluggish march (and end to the financial year).
In fact the rebound into April was at the fastest pace in almost six years, since 2011 in the aftermath of the pick up in electronics and car production after the dislocations caused by the Fukushima earthquake, tsunami and nuclear power plant problems.
Japan’s industrial output rose 4.0% in April from March, the strongest growth since posting a 4.2% jump in June 2011. It followed a revised 1.9% fall in March, according preliminary data from the Ministry of Economy, Trade and Industry yesterday. The figures will be confirmed in mid-June.
The ministry said the jump was due primarily to solid growth in production of transport equipment, machinery and electronic devices and components, in that order. The annual pace of production growth also picked back up, accelerating to 5.7% after slowing to a pace of 3.5% in March.
Reuters says Japanese analysts believe the strong rise closely correlates with gross domestic product data.
Japanese GDP grew by an annualised 2.2% in the three months to March, according to the first estimate from Japan’s Cabinet Office released in early May.
That was up a full percentage point from growth of 1.2% in the previous quarter and well above market forecasts.
Quarter-on-quarter GDP rose 0.5% in the first quarter, accelerating from a 0.3% rise in the previous quarter.
The Japanese economy grew in the first quarter at the fastest rate in a year to mark the longest period of expansion in a decade, thanks to solid exports and a helpful boost from private consumption.
Manufacturers surveyed by the ministry expect output to fall 2.5% in May and rise 1.8% in June. The Ministry of Economy, Trade and Industry thought kept its assessment of production unchanged, saying that production was picking up.
Figures out earlier this week showed that Japan’s unemployment rate held steady at 2.8% while the jobs-to-applicants ratio, (an important indicator) hit 1.48 in April, exceeding the peak in the July, 1990 reading (which was in the midst of the great Japanese economic bubble).
But despite the very tight labour market and growing shortages of staff, (and anecdotal reports of Japanese shops and restaurants bering forced to close early because they can’t get enough staff to stay open), there is still little upward pressure on wages.
That is frustrating the Bank of Japan and the Government which want a wages explosion of sorts to help push inflation towards its goal of2%. Prices were up by just 0.4% on a year ago in April ad should have reached 2% in 2016.
Data released late in may showed the country’s export machine is back in top gear.
In fact exports rose for a 5th straight month in April, as shipments of semiconductors and steel rose. Exports rose 7.5% in April from a year ago, after a 12% rise in March. Imports surged 15.1%, rising for the fourth straight month on rising energy costs.
