Japan Country Profile - Economy, Currency, Central Bank, Canadian Dollar, CAD

Introduction

Japan is the 2^nd largest economy in the world with GDP valued at $4.367 trillion in 2006, and a population of 127 million. The Japanese economy has highly developed banking, insurance, real estate, retail, transportation and telecommunications industries. Its technology advanced factories produce motor vehicles, electronics equipment, machine tools, steel and nonferrous metals, ships, chemicals. Japan is the 4^th largest exporter in the world behind Germany, the US, and China. However, Japan needs to import most of its energy and food as it does not have much agricultural land or oil reserves.

Go to Central Bank Watch Go to Economic and Financial Profile

Japan's Fundamental Indicators and Chart

Monthly Data for April, 2008

Date	EST	Indicator	Actual	Forecast	Previous
4/1	7:50pm	Monetary Base y/y	0.0%		0.1%
4/7	1:00am	Leading Index	50.0%	50.0%	36.4
		Preliminary Measure for February Provided by: Cabinet Office Coincident Index: 44.4%, forecast 44.4%, pr 20.0% Prelimary data for February's leading indexes shows recovery in housing investment and durable goods shipments. The index has bounced from its 0 reading last September and is now right at the expansion/contraction boundery.
4/8	1:00am	Eco Watchers Survey	36.9	36.0	33.6
		For March Provided by: Eco Watcher Survey Eco Watchers Outlook: 38.2, pr. 39.5 (Feb), 35.8 (Jan)
4/8	11:25pm	BOJ Interest Rate Statement	0.50%	0.50%	0.50%
		Release from Bank of Japan It was a unanimous decision by the Monetary Policy to leave rates at 0.50%. Its the 16th straight meeting that rates have been held at this rate. The Bank members will continue to assess how much the US economy, one of Japan's key trading partners, will slow down and what effects that will have on the global economy. The news was greeted with little action in the markets, as its outcome was widely expected. Earlier today, both houses of parliament approved the nomination of deputy governor Shirakawa as the new Bank of Japan governor, which has been left vacant since March 19 when former chief Toshihiko Fukui stepped down after his five-year term ended.
4/9	2:00am	BOJ Monetary Policy Report
		BoJ Monetary Policy Report: Exports have continued to increase. Corporate profits have been leveling off, albeit at a high level, and business sentiment has recently become cautious. Under these circumstances, the pace of increase in business fixed investment has become slower. Private consumption has been firm in a situation where household income has continued rising moderately. Meanwhile, public investment has been sluggish. Housing investment has remained at a low level, although there have been signs of recovery. With these developments in demand both at home and abroad, production has been more or less flat lately, partly in reaction to the relatively large increase in the second half of last year. Japan's economy is expected to grow at a slower pace for the time being and follow a moderate growth path thereafter. Exports have been a lift to the economy, but rising level of energy and commodity prices and even core prices are hurting business confidence and thus corporate investment. Levels of production has been more or less flat, but as we can see today, Machinery Orders rebounded. Finance activies do not reflect credit tightening conditions many economies such as the US's are facing.
4/9	2:00am	Machinery Tool Orders y/y	2.9%	-0.5%	-0.5% -0.7%
		Preliminary measure for March In March, orders from overseas rose 11.2% on year to Y77.9 billion, while domestic orders slipped 5.8% to Y63.3 billion. This came after a decline in February and a flat reading in January. Orders from abroad has been very favorable for export growth. But despite an recovery in demand, businesses are scaling back capital investment due to high energy and materials prices.
4/9	7:50pm	Core Machinery Orders	-12.7%	-14.0%	19.6%
		For February "Core Private Sector Machinery Orders" Provided by: Cabinet Office After surging at the fastest pace in 7 years in January, machinery orders fell 12.7% in February. It was the biggest fall in more than 4 years, though surprisingly was still above forecasts of an even steep decline. Declines in orders were led by the steel, pulp and paper, and petroleum sectors. This indicator is a leading measure of corporate capital spending.
4/9	7:50pm	Current Account	1.46T	1.61T	2.07T
		For February, Seasonally adjusted Provided by: Ministry of Finance Unadjusted Trade Balance: ¥2467.7B, forecast ¥2465.0B, pr ¥1235.8B Japan's unadjusted trade balance increased 2.9% to 2.468 trillion yen ($24.2 billion) in February. Higher portfolio income offset a drop in the trade surplus. The figures were in line with expectations. The trade surplus fell 6.6% to 1.03 trillion yen, as exports climbed 9% and imports rose 12.5%. On a seasonally adjusted basis, the current account surplus undershot forecasts, and shrank to 1.46 trillion yen compared to January's 2.07 trillion.
4/9	7:50pm	M2+CD Money Supply y/y	2.2%	2.4%	2.3%
4/10	7:50pm	Corporate Goods Price Index y/y	3.9%	3.4%	3.6% 3.4%
		For March Provided by: Bank of Japan Importance: Medium CGPI m/m: 0.5%, forecast 0.3%, pr. 0.4% The corporate goods price index jumped in March, climbing 3.9% at an annual pace, and at 0.5% over the month. The 3.9% increase was the fastest pace in 27 years, and led by surging commodity prices. The results surprised the consensus forecast on the upside. The export price index, rose 1.4% y/y and the import price index, was up 21.6% y/y.
4/13	7:50pm	BOJ Meeting Minutes
4/17	12:03am	Industrial Production m/m	1.6%	-1.2%	-0.5% -1.2%
		Final Version for February Provided by: Ministry of Economy, Trade and Industry Industrial Production y/y: 5.1%, pr. 2.9% Industrial production increased 1.6% in Feb on a seasonally adjusted basis. It reversed last month's losses of 0.5% which were revised up as a result of the government switching the base year for calculations to 2005 from 2000. The news was a pleasant surprise, but with the global economy feeling strained and raw materials prices surging, Japanese production may be contained.
4/18	1:00am	Consumer Confidence	36.7	36.5	36.1
		"Household" Confidence for March Provided by: Cabinet Office Official Release: Page and data Consumer confidence rose in March, the first time it has done so in 6 months. Consumers and households have digested the prospects of a weakening economy and rising inflation. February's confidence of 36.1 was the lowest since March 2003. The sub-indexes for general well-being, employment and willingness to purchase durable goods increased, while the income growth sub-index declined. The Yen was declining during the Friday session, as carry trade sentiments were piqued by news that the Bank of England wanted to help ease money-market conditions boosting the appeal of higher-yielding currencies.
4/20	7:50pm	Tertiary Industry Activity Index	-1.7%	-0.5%	0.4% 0.7%
		For February Provided by: Ministry of Economy, Trade and Industry Official Source: Indicator Page Demand for services fell in February, the tertiary index showed as it declined 1.7%. With consumers feeling the pinch as a result of high inflation, they are spending less. Companies are also facing higher prices for raw materials and scaled back purchases of services. Despite the poorer data, the Yen was stronger against the Dollar and Pound, reversing the excess moves of Friday. The Yen was still generally weaker against the Euro, Aussie and Kiwi.
4/22	7:50pm	Trade Balance	0.77B	0.89B	0.60T
		For March - Seasonally Adjusted Provided by: Ministry of Finance Total Merchandise Trade Balance: ¥1.118B, forecast ¥1.405B, pr. ¥970.0B
4/23	7:50pm	All Industrial Activity Index	-1.4%	-0.5%	0.0%
		For February All Industries Activity Index y/y: 1.7%, pr. 0.6% Japan's all-industries index fell 1.4% in February, as weakness in the service sector was a bigger drag on the index that better industrial output activity. For the year, the index was up 1.7% compared to a 0.6% figure in January.
4/23	7:50pm	Corporate Service Price Index y/y	0.4%	0.7%	0.7%
		For March Provided by: The Bank of Japan CSPI m/m: pr. 0.3% (Feb), -1.1% (Jan), 0.1% (Dec) The amount that companies pay for services increased at a lower rate than expected in March. The CSPI increased 0.4%, compared to the consensus forecast of 0.7%, which was also February's mark. It was the 16th straight month that the indicator was positive, and this month's gains were led by increase in transportation costs (2.6%) and real estate service fees, which include rents (1.4%).
4/24	7:50pm	Consumer Price Index y/y	1.2%	1.2%	1.0%
		National CPI for March Provided by: Statistics Bureau CPI ex. Fresh Food y/y: 1.2, forecast 1.2%, pr 1.0% (Feb), 0.8% (Jan) CPI ex. Food & Energy y/y: 0.1%, forecast 0.0%, pr. -0.1% (Feb), -0.1% (Jan) Both Japan's national headline consumer price index and core measure, which excludes fresh food were up 1.2%. The rise in the core value is the biggest increase in almost 10 years. Looking deeper into the data, excluding both food and energy from CPI, inflation was 0.1%, slightly higher than expectations, and shows that energy costs made up a bulk of the increase.
4/24	7:50pm	Tokyo Consumer Price Index y/y	0.6%	0.5%	0.6%
		Tokyo CPI for April Provided by: Statistics Bureau Tokyo CPI ex Fresh Food y/y: 0.7%, forecast 0.5%, pr 0.6% (Mar), 0.4% (Feb) Tokyo CPI ex Food & Energy y/y: 0.0%, forecast 0.1%, pr 0.1% (Mar), -0.1% (Feb) The Tokyo CPI, which acts as a leading indicator for the national measure, as its data is for one month in advance, showed inflation at 0.6%, matching the level in March, and higher than expectations. Core CPI, excluding fresh food, was up 0.7%, also higher than expectations. Taking out energy, in addition to food, from the equation prices were flat, and lower than the consensus forecast.
4/27	7:50pm	Retail Sales y/y	1.1%	1.0%	3.2% 3.1%
		For March Provided by: Ministry of Economy, Trade and Industry Large Retailer's Sales y/y: 0.2%, forecast -0.2%, pr. 1.2 (rev from 1.3%) Retail Sales m/m: 0.5%, forecast 0.7%, pr. -1.0% Retail sales increased 1.1% in March as a result of increased spending on fuel. Sales at fuel retailers rose 4% from a year earlier. The data does suggest that consumer spending may not be as weak imagined when looking at the consumer sentiment data.
4/27	7:50pm	Large Retailers	0.2%	-0.2%	1.2%
4/29	7:15pm	Manufacturing PMI	48.6	49.0	49.5
		For April The NTC Research/Nomura/JMMA Purchasing Managers Index
4/29	7:30pm	Household Spending y/y	-1.6%	0.4%	0.0%
		For March Provided by: Statistics Bureau Household spending fell 1.6% in March compared to last year, as incomes rose 0.6%. Disposable income was down 1%. The data showed that households cut back on spending for housing (-22%), transportation (-9.5%) and education (-9.3). The economy in Japan has been getting weaker as high inflation eats into incomes, and pushes down confidence. Recent business activity have shown that the US led global slowdown is starting to effect exports, and not this data shows that domestic demand may be waning as well.
4/29	7:30pm	Unemployment Rate	3.8%	3.9%	3.9%
		For March (s.a.) Provided by: Statistics Bureau
4/29	7:50pm	Industrial Production m/m	-3.1%	-0.7%	1.6%
		Preliminary version for March Provided by Ministry of Economy, Trade and Industry Industrial Production y/y: -0.4%, forecast 2.0%, pr. 5.1% Production at Japan's factories tumbled in March, falling 3.1%, the largest decrease in nearly 5 years. The decline was much steeper than anticipated by economists. With the US in a sharp slowdown, Japanese exports are feeling the pressure, despite demand from other markets. However as the effects of the credit crunch spread to other economies, demand may falter there as well. Shipments to China, for instance, have cooled. Declines were led by automobile production, as Toyota and Honda cut domestic production. Those reduction can have ramifications for other industries, and on employment.
4/30	12:28am	BOJ Interest Rate Statement	0.50%	0.50%	0.50%
		Provided by: Bank of Japan The Bank of Japan held rates steady at 0.5% in a unanimous decision. The bank is expected to lower growth projections and signal that it will keep rates on hold in order to assess how the US slowdown will affect the Japanese economy going forward. Data released today showed that household spending is down, and industrial production took a big hit in March. The manufacturing PMI for April was also down.
4/30	1:00am	Housing Starts y/y	-15.6%	-6.5%	-5.0%
		For March Provided by: Ministry of Land, Infrastructure and Transport, Government of Japan Annualized Housing Starts: 1.088M, pr. 1.150M (Feb), 1.187M (Jan) Construction Orders: 6.4%, pr. 18.4% (Feb), -2.5% (Jan) Housing starts took a big tumble in March, falling 15.6%, and undershooting economists' expectations. The annualized pace for housing starts dropped to 1.088 million from February's 1.150 million.
4/30	9:30pm	Average Cash Earnings y/y	1.2%	1.2%	1.5% 1.3%
		For March Provided by: Ministry of Health, Labor and Welfare

Previous Month's Releases

Next Month's Releases

Central Bank Watch - Latest Bank of Japan Decision

Back to top»

September
16th, 2008

Actual

Forecast

Revised Form

0.50%

N/A

Release from Bank of Japan
Previous Release: Statement on Monetary Policy

Next Release Date: October 06th 2008, 23:00 EST

Go to Japan's Interest Rate Fundamental Indicator Page

Central Bank Watch - Bank Officials' Comments

Back to top»

November 22 (BOJ Seiji Nakamura) -- Bank of Japan board member Nakamura said that "downside risks" to US economic growth are rising as the housing recesssion worsens. ``Housing investment continues to decline and consumer sentiment-related indicators are worsening because of the subprime-mortgage problem.'' The US is Japan's biggest export market, and puts back chances of an interest rate hike by the Bank.

See archived comments

Central Bank Watch - Latest Bank of Canada Decision

Back to top»

Closely Linked to Global Stock Markets

The Japanese currency has a very low interest rate, 0.5%, and for a long time had the ZIRP (Zero Interest Rate Policy). Such a low interest rate made the Yen a funding currency for carry trade. In carry trade an investor borrows Yen to purchase assets with higher interest rates abroad. In order to purchase these assets abroad, the investor must sell the Yen and buy the local currency, thereby reducing demand for the Yen. During times of turmoil in global stock markets, investors hurry to pay back their loans in Yen, therefore strengthening the Yen.

This figure is a weekly chart, of the GBP/JPY pair. Prices moving upward favor the strength of the Pound (the top currency in the GBP/JPY quote). When prices move down they favor the Yen (the bottom currency in the pair).

Japan's Economic Slump

Interest rates in the country are so low because the Japanese economy has battled back from an economic slump starting in 1990, after a stock market tumble. The country the had to battle deflation, which gave rise to lower wages and lower investment. In 2003, the Bank of Japan aggressively boosted the money supply to keep the yen weak. Increased cost-effectiveness in the export sector has led to business profits. Economic data, such as inflation, does not give the central bank much room to raise rates, and the country is vulnerable to a cool down in US spending and growth.