30 Jan 2015
Japanese inflation may continue to decline, but growth recovering – Danske
FXStreet (Barcelona) - Flemming J. Nielsen, Senior Analyst at Danske Bank, reviews the recent Japanese data releases, expecting CPI to fall to 0.3%yoy in January and 0.2%yoy in February.
Key Quotes
“CPI excluding fresh food and adjusted for the consumption tax hike in April last year (the measure the Bank of Japan (BoJ) targets) eased to 0.5% y/y from 0.7% y/y in November. We expect this measure for inflation to ease further to 0.3% y/y in January and 0.2% y/y February before starting to bottom out (obviously depending on the development in crude oil prices).”
“Industrial production in December rebounded 1.0% m/m on the back of a 0.5% m/m on the back of a 0.5% m/m drop previously. The production plans released for January and February were relatively strong.”
“Based on these, we now forecast that industrial production will increase 4.0% m/m in February before contracting 2.4% m/m in February.”
“The labour market data for December released overnight was stronger than expected. The unemployment rate in December declined to 3.4% (consensus: 3.5%, DBM: 3.5%) from 3.5%. This is the lowest unemployment rate since 1997.”
“Based on December data we have revised our forecast for GDP growth in Q4 14 marginally down to 0.5% q/q after a 0.5% contraction in Q3 14. For Q1 14, we expect GDP growth to expand 0.6% q/q.”
“We do not expect the BoJ to respond with more easing in the coming months despite our expectations of continued decline in inflation in the coming months.”
Key Quotes
“CPI excluding fresh food and adjusted for the consumption tax hike in April last year (the measure the Bank of Japan (BoJ) targets) eased to 0.5% y/y from 0.7% y/y in November. We expect this measure for inflation to ease further to 0.3% y/y in January and 0.2% y/y February before starting to bottom out (obviously depending on the development in crude oil prices).”
“Industrial production in December rebounded 1.0% m/m on the back of a 0.5% m/m on the back of a 0.5% m/m drop previously. The production plans released for January and February were relatively strong.”
“Based on these, we now forecast that industrial production will increase 4.0% m/m in February before contracting 2.4% m/m in February.”
“The labour market data for December released overnight was stronger than expected. The unemployment rate in December declined to 3.4% (consensus: 3.5%, DBM: 3.5%) from 3.5%. This is the lowest unemployment rate since 1997.”
“Based on December data we have revised our forecast for GDP growth in Q4 14 marginally down to 0.5% q/q after a 0.5% contraction in Q3 14. For Q1 14, we expect GDP growth to expand 0.6% q/q.”
“We do not expect the BoJ to respond with more easing in the coming months despite our expectations of continued decline in inflation in the coming months.”