Japan: A positive trend in retail sales – ING

Japan registered another piece of strong activity data today – this is fast becoming a habit as retail sales rose 1.1% MoM in July, which leaves the July year-on-year growth rate only slightly down on the 2.2% YoY rate recorded for June, at 1.9%, explains Rob Carnell, Chief Economist at ING.

Key Quotes

“Eyeballing this data, year-on-year retail sales growth seems to have shifted up to a higher pace since April. There is some base effect here, which is beginning to wear off, but the seasonally adjusted level of sales still appears to be rising on a trend basis, and this suggests that as the base effects wane, the year-on-year rate will remain positive, albeit at a slower pace of growth than is currently the case.”

“With his approval ratings in trouble, PM Abe will be grateful that the economy seems to be responding to his measures. However, of the three prongs of Abenomics, only loose monetary policy is currently in place. BoJ Governor Kuroda has little option but to keep QQE running in its current form until this changes.”