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Japan Economic Reports Roundup: The Good, Bad and Ugly of This Past Week

The Good:

Industrial output has soared to an all-time high, according to the Ministry of Economy, Trade and Industry. August figures showed a rise of 3.4% against the previous month and an increase of 4.3% over the same month last year. This was the first increase posted since May, but the second record-setting high seen this year. According to the ministry, the increase was led by the transport equipment and electronic parts and devices industries. Production is forecast to show a 0.8% decline in September, as much of the August gain was due to the restarting of auto parts factories in Niigata that had been shut down after an earthquake.

Household spending rose 1.6% in August to stand at 296,035 yen per household with two or more occupants. This is the sixth consecutive monthly rise, according to data published by the Statistics Bureau. Spending on ‘culture and recreation’ showed a gain of 10%. According to the same report, average household income was down 1.7% in August and stood at 467,786 yen.

Retail sales were up 0.5% in August, showing their first rise in three months, according to the Ministry of Economy, Trade and Industry.

The Bad

Unemployment inched up by 0.2 points to 3.8% in August, according to the Statistics Bureau. 64.46 million people were employed in Japan in August, 190,000 more than a year ago. On the other side, 2.49 million people were out of work, which was a decline of 230,000 people, or 8.5%, from a year ago. This was the first increase in the unemployment rate seen in 11 months.

Consumer prices fell 0.1% in August, according to the Ministry of Internal Affairs and Communications. Core CPI has now fallen for seven consecutive months, even as the Bank of Japan continues to predict rises in their statements. Japan’s core CPI does not include fresh food costs. Energy costs, however, are included. Given August’s figures and the shrinking of GDP in the April-June quarter, one has to assume that the BOJ will not be making any move to raise interest rates in September.

The Ugly

Housing starts fell by a record 43% in August. Ground was broken on 63,076 new units last month, according to the Ministry of Land, Infrastructure and Transport. Stricter regulations that were put in place following revelations that data had been falsified to show that many homes were earthquake resistant was blamed. Those regulations came into effect on June 20. Housing starts had shown a 23.4% decline in July

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