Japan: Mixed economic releases - ING

Rob Carnell, Chief Economist at ING suggests that disappointing machine orders from Japan suggests that investment is softening, but PPI data is encouraging if it feeds through to CPI inflation.

Key Quotes

“A very mixed bag of data from Japan this morning, with some disappointing June machine orders data (especially from manufacturers) shedding some doubt on what had looked to be a developing domestic demand pick up. But this was partly offset by some stronger PPI data.”

“Neither piece of data is game changing, in the sense that they will have any impact on government or BoJ policy stances. But both bear continued watching, given their contradicting messages.”

“Our best guess is that the machine orders data is the aberration here. We continue to believe Japan is staging a mini-pick up in domestic demand, and the PPI data may see some feed across to CPI in the coming months. But todays data indicate that our positive story is not in the bag yet.”