By Max Sato
(MaceNews) – Here are the key Japanese economic events for the coming week. Stiff U.S. tariffs on imports are having some cooling effects on the auto and steel industries as seen in recent production and trade data but not pushing the global or domestic economy into a tailspin. Inflation in Japan, now at the top among Group of Seven major economies, remains above 3%, eroding the purchasing power of many households.
– Monday, July 14, 2025
0850 JST (2350 GMT/1950 EDT Sunday, July 13) The Cabinet Office releases May machinery orders.
Mace News median: core orders -0.9% m/m (range -4.2% to +3.0%) vs. Apr -9.1%; +7.1% y/y (range -3.0% to +10.0%) vs. Apr +6.6%
Japanese core machinery orders, the key leading indicator of business investment in equipment and software, are forecast to post a second straight drop in May, down 0.9% on the month (some expect a slight rebound), after slumping 9.1% for the first drop in three months. The focus is on whether subcontractors of the auto, steel and other industries that are directly hit by 25% Trump tariffs are reporting slower orders.
The Bank of Japan’s quarterly Tankan business survey for June showed both large and smaller firms revised up their capex plans for fiscal 2025 ending next March despite uncertainty over trade conflicts.
Last month, the Cabinet Office maintained its assessment after upgrading it in the November report, saying, “Machinery orders are showing signs of a pickup.” The official projection provided in May called for a 2.1% pullback in Q2 vs. a better-than-expected solid 3.9% rise in Q1.
From a year earlier, core orders, which track the private sector and exclude volatile orders from electric utilities and for ships, are expected to mark their eighth consecutive gain, up 7.1%, following +6.6% the previous month.
– Thursday, July 17, 2025
0850 JST (2350 GMT/1950 EDT Wednesday, July 16) The Ministry of Finance releases June trade.
Mace News median: exports -0.3% y/y (range -2.2% to +1.5%) vs. May -1.7%; imports -1.5% y/y (range -2.7% to +1.0%) vs. May -7.7%; trade surplus ¥328.45 billion (range: a surplus of ¥140.00 billion to a surplus of ¥440.10 billion) vs. a revised ¥638.56 billion deficit; ¥221.35 billion surplus in June 2024
Japanese export values are forecast to be nearly flat in June, down 0.3% on year, after slipping 1.7% in May for the first drop in eight months, in the face of stiff U.S. tariffs on automobiles and metals that have prompted Japanese carmakers to reduce the prices for U.S. customers to cover higher import costs (export volumes are expected to show a third straight gain).
Expected sluggish export values are led by autos, iron and steel and auto parts, which are largely offset by higher shipments of engines, foodstuffs and ships.
Import values are expected to dip 1.5% for a third consecutive drop after slumping 7.7% in May (volumes were up for the third straight month). The decline was likely led by falling prices for crude oil, coal and refined petroleum products while imports of semiconductors are seen up.
The trade balance is forecast to post a surplus of ¥328.45 billion, the first black ink following a revised ¥638.56 billion deficit in May, and compared to a ¥221.35 billion surplus in June 2024.
– Friday, July 18, 2025
0830 JST (2330 GMT/1930 EDT Thursday, July 17) The Ministry of Internal Affairs and Communications releases June national CPI.
Mace News median: total CPI +3.3% y/y (range +3.3% to +3.4%) vs. May +3.5%; core CPI (ex-fresh food) +3.4% y/y (range +3.3% to +3.4%) vs. May +3.7%; core-core CPI (ex-fresh food, energy) +3.4% y/y (range +3.2% to +3.4%) vs. May +3.3%
Consumer inflation in Japan is expected to ease in two of the three key measures in June thanks to the Ishiba government’s “preventive” subsidies to cap retail gasoline and heating oil prices but the annual CPI rates are still above 3% amid high processed food prices, temporarily exceeding the Bank of Japan’s long-run 2% price stability target.
The pace of deceleration is unlikely to be so drastic as in the Tokyo CPI data released last month. The metropolitan area saw a plunge in water bills due to the metropolitan government’s free base charge for four months that began in June.
Domestic rice prices are easing slightly but still nearly double the levels seen a year earlier in the aftermath of protracted supply shortages caused by last year’s bad weather and decades-long government policy to reduce rice harvesting areas aimed at supporting the prices of the staple for famers.
The core reading (excluding fresh food) is forecast to post a 3.4% rise on year after its annual rate picked up to 3.7% in May from 3.5% in April. The underlying inflation measured by the core-core CPI (excluding fresh food and energy) is expected to edged up to 3.4% from 3.3%. The year-on-year rise in the total CPI is seen at 3.3%, easing further from 3.5% in May from 3.6% in April as fresh vegetable prices have stabilized after an earlier spike.
The current consumer price rises are not backed by domestic demand but largely pushed up by higher import costs. As CPI data have shown, wage-heavy services price hikes still lag far behind goods price gains.
This means that it is not accompanied by sustained and substantial wage growth and that underlying inflation is still below the Bank of Japan’s 2% target. Yet the bank is still in the gradual process of normalizing its accommodative policy stance that had kept short-term interest rates in a range of zero to slightly negative until March 2024, when it conducted its first rate hike in 17 years and ended the seven-year-old yield curve control framework.
At its latest meeting on June 16-17, the BOJ’s nine-member board voted unanimously to maintain the target for the overnight interest rate at 0.5% for the third straight meeting after hiking it by 25 basis points (0.25 percentage point) in January amid uncertainty over the trade war and heightened geopolitical risk.
As for financial asset tapering, the board decided in an 8 to 1 vote to moderate the JGB purchase reduction pace to by about ¥200 billion a quarter in fiscal 2026 starting in April from by about ¥400 billion now, which will still reduce the pace of its JGB buying to around ¥2.1 trillion in January-March 2027 from about ¥4.1 trillion in January-March 2027.