Japan: Weak IP, household spending in September - ING

Rob Carnell, Chief Economist at ING, notes that Japan’s jobless rate has remained at 2.8%, and the job vacancies-to-applicants ratio at 1.52 for the third consecutive month.

Key Quotes

“Japan’s labour market is tight, but there is nothing in these numbers to get your teeth into. There was worse news from the household sector, where September household spending fell 0.3% YoY from 2016, though the trend still appears to be averaging slightly stronger on a non-scientific eyeball-based examination of the data. Industrial production was marginally less bad than had been expected, falling only 1.1%MoM contrary to expectations of a 1.6% fall, and helping the year-on-year rate to nose up from 2.0% to 2.5% (though this compares poorly with a 5.3% gain in August).”

“The BoJ kept policy unchanged as expected, with new member Kataoka dissenting again on a similar basis to his original dissent at his first meeting. In his view, the undershooting of inflation required the BoJ to target 15Y JGBs at under 0.2%. The current yield is just under 0.3%.”

“The principle change stemming from this meeting was in the accompanying inflation forecasts. Here, recent weakness in the Tokyo price figures have led to the MPB members scaling back their forecasts for FY2017 to a median headline CPI inflation view of 0.8%YoY. This is lower than the 1.1% forecast in July.”