– No data out of Japan during the past week besides industrial production, which came in at 1.3% which was unchanged from August though below the forecast 1.5%
Regional Economic Report
According to reports from regions across Japan, the Tokai region reported that its economy had been expanding moderately, albeit at a somewhat reduced pace, and the other eight regions noted that the economy had continued to recover moderately. These reports were based on the assessments that a virtuous cycle from income to spending had been maintained and the effects of the Kumamoto Earthquake had eased, despite such factors as the effects of the slowdown in emerging economies. Compared with the last assessment in July 2016, the Chugoku region revised its assessment upward, reporting that downward pressure on production had weakened, as did the Kyushu-Okinawa region, noting that the effects of the Kumamoto Earthquake had eased. On the other hand, the Tokai region revised its assessment downward, reporting that private consumption had shown relatively weak developments in some indicators. The other six regions reported that their assessments regarding the pace of economic improvement had remained unchanged. Full Report
New Challenges for Japan’s Labor Market
“Whether Japan’s economy will grow in the long-run depends on whether the country’s labor market can successfully adapt to this changing environment. Indeed, labor market reform is a vital part of the current government’s policy agenda. As for the long-term economic outlook, given Japan’s aging population and low birth rate, an increase in labor force participation and a further rise in labor productivity are both essential if Japan is to lift sustainable long-run growth, in other words, to raise its growth potential.” Haruhiko Kuroda in his speech at the Japanese summit 2016 in Tokyo earlier this week.
Kurodo went on to explain how the impact of IT-related developments and globalization have affected Japan’s labor market and how machines and outsourcing to other countries have resulted in downward pressure on wages and jobs. The three challenges for Japan’s labor market are adapting to the changing economic environment and further advances in technological innovation, how the Japanese labor market will change in the face of further globalization and how the Japanese labor market will transform in response to demographic change in Japan. Kuroda emphasized, “We need to “work hard” to build and adjust to new customs and institutions that are highly adaptable to a variously changing environment. Full Report
Upcoming Tier 2 and 3 data releases
Monday: Exports (YoY)
Friday: Household spending, Jobs/ Applications Ratio, National Core CPI, Tokyo Core CPI, Tokyo Core CPI
Mid-year earnings are due to be released from major Japanese companies next week. This will have an impact on the Nikkei.
TOKYO, Oct 21 Japan’s Nikkei share average edged up on Friday morning, hovering at a near six-month high, as a weak yen lifted hopes that Japanese interim corporate earnings will not be worse than expected. Reuters