By Max Sato
(MaceNews) – Here are the key Japanese economic events for the coming week.
The revised Q2 GDP data is forecast by many economists to show little change from the initial reading, confirming that Japan’s wobbly recovery from the pandemic lingers on under the weight of trade woes and sticky inflation triggered by rising costs of labor (at last for workers!) and imported materials and products (the yen is still weak).
Both consumer and producer inflation has been easing, largely thanks to the Japanese government’s on-and-off fuel and utility subsidies and partly because domestic rice supply shortages, and thus sharp markups, are gradually easing from the recent peak (still sticky regular rice prices, +89.9% y/y in July, vs. +101.0% in May).
– Monday, Sept. 8
0850 JST (2350 GMT/1950 EDT Sunday, Sept. 7) The Cabinet Office releases revised (second preliminary) GDP for April-June.
Mace News median: +0.2% q/q (range: +0.2% to +0.5%) vs. prelim +0.3%; +0.9% annualized (range: +0.7% to +1.9%) vs. prelim +1.0%; +1.3% y/y (range: +1.2% to +1.4%) vs. prelim +1.2%
The second reading of Japan’s GDP data for the April-June quarter is expected to confirm that the sluggish but somewhat resilient economy posted its fifth straight quarter-on-quarter growth, up 0.2% on quarter (0.9% annualized), little changed from the initial estimate of 0.3% (1.0% annualized).
The preliminary data released on Aug. 15 showed that the stronger-than-expected Q2 growth was supported by a rebound in net exports amid modest export gains and weak imports. Domestic demand dipped amid elevated costs of living and falling real wages.
In the revised Q2 GDP data, domestic demand is forecast to have provided a slightly positive 0.1 percentage point contribution to total domestic output (revised up from -0.1 point). The decline in private sector inventories by -0.3 point (unrevised) overwhelmed a 1.2% rise q/q (no forecasts for contribution) in business investment, revised down from +1.3% (+0.2 point). External demand (exports minus imports) is believed to have pushed up the Q2 GDP by 0.3 point, as reported last month.
Looking ahead, Japan’s economic performance in the July-September quarter is expected to remain sluggish as consumers stay frugal about spending amid falling real wages, external demand is marred by trade rows and some firms are wary of implementing their solid capex plans.
Uncertainty over global growth remains despite trade deals on tariffs between Washington and (sort of) U.S. allies, given the erratic patterns of presidential orders. Trump tariffs on autos and metals have promoted Japanese carmakers to slash the prices for their U.S. customers to protect their market share, which seems to be working but could eventually hurt profits among manufacturers.
Consensus forecasts for key components in percentage change on quarter except for private inventories and net exports, whose contributions are in percentage points. Preliminary figures are in parentheses.
GDP q/q: +0.2% (+0.3%); 5th straight rise
GDP annualized: +0.9% (+1.0%); 5th straight rise
GDP y/y: +1.3% (+1.2%); 4th straight rise
Domestic demand: 0.0 point (-0.1 point); flat after 1st rise in 2 qtrs
Private consumption: +0.2% (+0.2%); 5th straight rise
Business investment: +1.2% (+1.3%); 5th straight rise
Public investment: -0.1% (-0.5%); 1st drop in 2 qtrs
Private inventories: -0.3 point (-0.3 point); 1st drop in 2 qtrs
Net exports (external demand): +0.3 point (+0.3 point), 1st rise in 2 qtrs
Thursday, Sept. 11
0850 JST (2350 GMT/1950 EDT Tuesday, Aug. 12) The Bank of Japan releases August corporate goods price index.
Mace News median: CGPI +2.8% y/y (range: +2.5% to +2.9%) vs. July +2.6%; -0.1% m/m (range: -0.2% to +0.1%) vs. July +0.2%
Higher demand for non-ferrous metals – first in anticipation for easing trade conflicts, then in light of trade deals between Washington and its allies – have provided some support to the corporate goods price index in the past couple of months.
On the month, the CGPI is forecast to post its first drop in two months, down 0.1%, after rising 0.2% in July and slipping 0.2% in June. The increase in July was led by higher costs for fuels (gasoline, diesel, heavy fuels), utilities (electricity), farm produce (polished rice, pork, beef) and non-ferrous metals.
The summertime electricity surcharge levied by power companies likely added a slight upward pressure to the index last month.