According to new data, Japan is back in deflation. This might encourage the BOJ to act. Last week the governor of the Bank of Japan, Masaaki Shirakaw was more optimistic concerning futures trades benefits in a speech he gave in Tokyo. He noted that futures trades can enhance public welfare and advance futures markets but emphasized the need for a centralized clearing of trades.
Prelim Industrial Production: Sunday, 23:50. Japanese industrial production dropped a revised 3.4% in May from the previous month, worse than the preliminary reading of a 3.1% decline. Weakness in European demand lowered automobile output, and the slowdown in China weighed down on Japan’s economic growth. Japanese Government spent over 20 trillion yen on rebuilding damaged areas after the disaster in March 2011 supporting growth in three consecutive quarters but current global uncertainty poses a risk on Japan’s exports and growth prospects. An increase of 1.6% is predicted now.
Manufacturing PMI: Monday, 23:15. Japanese manufacturing activity contracted in June for the first time in seven months indicating the economic boost from the reconstruction activity is starting to ware off. The reading fell to a seasonally adjusted49.9 in June from50.7 in May going below the 50 point line indicating contraction.
Household Spending;
Monday, 23:30.Japan’s average household spending continued to increase in April rising 4.0% from 2.6% in the previous month, well above expectations. The rise was triggered by government subsidies for buying low-emission vehicles. Another increase of 3.1% is expected this time.
Average Cash Earnings:
Tuesday, 1:30. The average cash earning of employees in Japan dropped 0.8% in June from a year earlier. This figure was revised down to a 1.1% decline. Workers in gas, heat supply, water as well as Finance and insurance workers earned less in June compared to a year ago. A small rise of 0.1% is forecasted.
Housing Starts: Tuesday, 5:00. Housing starts in Japan climbed 9.3% on a yearly base to 69,638 units in May from 10.3% rise in the previous month. This was the fourth straight rise. Government reward points was the main cause for the rising trend in housing starts although lingering effects from the reconstruction works in the earthquake-hit northeastern region also contributed to this upward trend. A further climb of 9.5% is anticipated.
Monetary Base: Wednesday, 23:50.Japan’s monetary base continued to expand in June jumping 5.95 from 2.4% gain in the previous month. The rise was well above predictions. BOJ Governor Masaaki Shirakawa supports the expansion inJapan’s monetary base claiming it stimulates Japan’s economic growth. The monetary stimulus is expected to help fight deflation and reach the 1% inflation target set by the BOJ. Another improvement with a 6.2% climb is expected now.
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