Courtesy of Mish.
Inquiring minds are looking at the latest inflation reports from Japan for clues in the success or failure of Abenomics and prime minister Shinzu Abe's stated goal of two percent inflation.
In December, Japanese inflation fell to 0.5% despite massive economic loosening, a 1% rise in industrial production, and a dip in the unemployment rate to 3.4%, the lowest since 1997.
Today Reuters reports Japan January Inflation Seen Easing, Factory Output Up.
Japan's core inflation is seen slowing for a sixth month in January while factory output is expected to rise, underlining the policy challenge facing the Bank of Japan as it strives to speed up economic growth and achieve its 2 percent price target.
Stripping out the effects of a sale tax hike, the nation's core consumer price index (CPI) – excluding volatile fresh food but includes oil products – is forecast to have increased 0.3 percent year-on-year last month, a Reuters poll showed.
The Bank of Japan is counting on exports to help offset the still-weak private consumption, and for weak oil prices to spur companies to spend more, helping the economy gather speed after last April's sales tax hike tipped it into recession.
The nation's factory output is seen jumping 2.7 percent in January from the previous month, the poll showed. In December, output increased 0.8 percent on-month, after a 0.5 percent fall in November.
Household spending is expected to have fallen 4.1 percent in January from a year earlier partly due to bad weather, down for a tenth straight month, the poll showed. And retail sales are set to fall an annual 1.3 percent last month, down for the first time in seven months.
Record Streak of Bad Weather
Household spending is down 10 straight months, partially do to bad weather. Is that a record streak of bad weather or what?
Those are forecasts of course, but with expectations of a 4.1% decline in spending, I will go out on a limb and guess the report is at least in the ballpark.
Markit Manufacturing PMI Suggests Growth Slowing
Markit claims the Japan Manufacturing PMI shows "solid production growth" but that not my takeaway from looking at the data.
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