This from the Bank of Japan, in spite of recent QE programme and a cut that takes the bank rate effectively to zero. More worrying still is the reasoning behind forecasts of increased export growth:
Japan’s economy is likely to grow at a slower pace for some time, but is expected to return to a moderate recovery path thereafter… Exports are likely to be more or less flat for the time being, but they are expected to increase moderately again, reflecting the improvement in overseas economic conditions.
Japan’s economy grew by just 0.1 per cent in the second quarter, a sharp slowdown on the 1.2 per cent growth in Q1. Hurt by a strengthening yen, annualised, seasonally-adjusted Q2 growth is now 0.4 per cent, against last quarter’s (revised) 4.4 per cent.
The slowdown means China’s economy was larger than Japan’s during the second quarter. From the paper:
The US sneezes, and the rest of the world catches a cold. Or maybe not these days?
Germany’s current dynamism reflects the increasing strength of its trading links with fast-growing Asian economies. The region’s rising importance forms part of a marked change in German export shares in the past three “crisis years,” according to economists at Unicredit’s Munich office. The chart, showing changes since 2007, shows how dependence on the US has fallen.
Another day, another bad report on the state of the US recovery.
Today, it was the US Census Bureau’s report on retail sales for June that ended up disappointing economists, showing a 0.5 per cent drop over the month as well as revisions to earlier data. Clearly, US consumers, who had started to spend again quite aggressively in late Winter, have since retrenched, amid persistently high unemployment and weakness in equity markets.
Yesterday, the bad news had been on the trade side, with an unexpected widening of the US trade deficit as imports, particularly from China, outpaced exports.
It was a rough day on the economics beat here in Washington. Rough in terms of America’s hopes for a strong economic recovery, that is.
Let’s recap. At 8.30am, the labor department released its weekly jobless claim figures. They were up unexpectedly to 472,000. Back in April, when job creation seemed to gathering momentum, many economists were looking at the stubbornly weekly jobless claims data as an aberration. Eventually, the numbers would have to move closer to 400,000. But now, the opposite seems true and private payroll growth looks destined to be modest, with persistently high unemployment and therefore high jobless claims. We’ll know more tomorrow from the more important monthly government jobs report, but still, the labour market outlook is not rosy.
Then, at 10am, a double punch in the face. The ISM manufacturing index dropped a lot more than expected in June, suggesting that one of the bright stars of the recovery is beginning to fade. Most economists knew that after inventories were restocked, there would be some loss of momentum.
I’ve been asking around Tokyo about views on the push in the US for a stronger renminbi. See also Kevin Brown’s excellent piece in the paper yesterday.
The basic answer is: yes, a controlled and gradual appreciation in the renminbi against the dollar would be a good thing, to sustain global growth and reduce global imbalances.
Japan’s export figures for February are out today and they show that recovery is continuing. Fine.
Today’s European Commission confidence indicators provide further reassurance that the region’s recovery remains on track. The eurozone’s economic sentiment indicator continued its v-shape rebound, rising to the highest since June 2008. But there are some interesting divergences – and not just between the big northern European economies and Spain, Ireland, Greece etc.
I was struck by the part of the survey covering manufacturers’ expectations for exports in coming months (which is included only four times a year). German industry is seeing optimism about overseas demand for its products soaring. January’s reading was the highest since the third quarter of 2007 and noticeably better than in the other main eurozone economies.
The real export data produced by the Bank of Japan (and hidden away on their website) is the best way to keep track of what is going on in the most crucial sector of Japan’s economy.
The more popular Ministry of Finance data are not adjusted for export prices, although as it happens, both sets tell the same story for December: that weaker figures the month before were a blip.