• Home
• About/Contact
• Economic Reports
• Research
• Advertising

• Business
• Economics
• Reports
• Finance
• Marketing
• Politics
• Real Estate
• Services
• Retail
• Tech

Subscribe

Japan’s Wholesale prices up 5.6% in June, highest rise since 1981

On Thursday, the Bank of Japan released its corporate goods price index data for June, and the trend of rising producer prices is only intensifying. Wholesale prices rose 5.6% from the previous year in June, which follows a 4.8% climb from May.

June’s rise was the highest seen in 27 years. We have to go back to February 1981, when the index rose 5.7%, to see a higher figure. According to the data, producer prices for petroleum and coal products increased 36.5% year-on-year, while while prices for iron and steel products jumped 18.3%. The only other categories to see a rise above the 5% level were pulp and paper (6.8%),metal products (6.0%), electric, power, gas and water (5.6%) and processed foods (5.3%).

On the other hand, declines were seen in the prices of information and communications equipment (-6.0%), lumber and wood (-5.4%), nonferrous metals (-3.1%), electronic components and devices (-2.8%), and electrical machinery and equipment (-0.8%). Read more

Corporate Services Price Index up 0.5% year-on-year in April

According to data released today by the Bank of Japan, the corporate services price index rose in April for the 21st consecutive month, showing a 0.1% gain against March and a 0.5% gain when compared to April 2007.

Driving the rise were increased transportation and industrial machinery leasing costs, as well as office space rental in the Tokyo area. In particular, ocean freight prices increased 14.1% on average, ship chartering services were 5.8% higher, and domestic air freight charges were up 5.7% against a year ago.

Mobile telecommunications services posted an 8.7% drop, showing the largest fall of any single service category.

Certainly, inflation in services costs is lagging behind that in the price of goods. In each of the four months reported thus far for 2008, the year-on-year change has been below 1.0 percent, while in each of the eight months preceding those, the increase had been over 1.0 percent, hitting 1.5% in three months.

From FY1998 to FY2005, Japan’s corporate services price index fell every year. It finally picked up by growing 0.2% in FY2006, and followed that with 1.1% growth in FY2007.

Japan’s producer prices up 3.7% in April

On Wednesday, the Bank of Japan announced that producer prices had risen 3.7% in April, following the 3.9% gain that was seen in March. April was the 50th straight month in a row that wholesale prices have increased, demonstrating the effect of strong commodity prices in the international market.

On the domestic index, higher iron and steel prices contributed most to the gain, while metal products (including cold rolled steel) contributed most to the gain in export prices. Import prices were driven up mainly by petroleum, coal and natural gas prices, with food, feed and metals contributing at lower rates.

What response might the Bank of Japan have to all of this? Most commentators currently seem of the mind that the BOJ is growing more cautious about possible raising rates. The Nikkei even went as far as to call the BOJ’s short-term stance “dovish” in an article that attempted to plot BOJ policy board member opinions on an X/Y graph (Bearish/Bullish is on the X axis while Positive/Negative sits on the Y).

With the GDP deflator and labor cost per unit still in negative territory, rising costs become more of a worry as firms will be forced to decide whether to raise prices or allow profit to be eroded. Consumer spending will have to hold up - in the face of stagnant wages and possibly increased prices - or exports will have to grow considerably, which seems highly unlikely in the near term. Or, as BOJ Governor Shirakawa announced a couple of weeks ago, “It’s possible [global commodity prices] may reach the ceiling relatively soon.”

It’s hard to tell if he was expressing hope or making a prediction…

Corporate Goods Price Index up 1.9% in August: Bank of Japan

Earlier today, the Bank of Japan published its monthly corporate goods price index for August, and the report shows a 1.9% rise against the same month last year.

This may not be the sexiest of reports (yes, that’s an invitation for nominations), but there are insights to be gleaned from it. First, we see that the price of Iron and steel has shot up 11.6% against a year ago, while the price of minerals went up 4.0%. No other commodity saw a price rise at 4.0% or above.

Coming close were lumber and wood (+3.6%), nonferrous metals (+3.4%), chemicals (+3.4%), textiles (+3.3%), and metal products (+3.2%).

The only reductions listed were in electrical equipment at -2.0% and precision instruments at -0.3%.

Economic Reports Roundup: Economy Watchers, Index of Business Conditions, Corporate Services Price Index, and US Car Sales

On Wednesday, the Cabinet Office announced the results of the July Economy Watcher’s Survey. The final score for the survey fell 1.3 points, to 44.7. This was the fourth consecutive month that the score was down. A figure below 50 means that pessimists outnumber the optimists in terms of economic conditions. This survey focuses on workers whose positions are highly sensitive to current economic conditions, such as taxi and truck drivers, sales staff at department stores, restaurant owners, and operators of other retail shops.

Released on Monday, the Index of Business Conditions Report for June (also from the Cabinet Office) showed increases in the Leading and Coincident Diffusion Indexes, but a sharp decrease in the Lagging Index. The Leading Index, which measures sentiment for the future, was up from 40.9 in May to 80.0 in June. The Coincident Index rose from 60 in May to 77.8 in June.

The Lagging Index, however, took a dive from 100 in May to 50.0 in June. According to the Cabinet Office, figures for industrial goods shipments were at record highs. The index for sales by small and midsize firms reached its highest figure when measuring from the beginning of the current cycle of economic expansion (February 2002).

In June, machinery orders were down 10.4% against June of last year. Machine tool orders, however, were up 18.2%, according to the Japan Machine Tool Builders Association.

On Friday, the Bank of Japan announced that wholesale prices were at their highest in nine years in July. The corporate services price index rose 2.1% in July, and showed upward movement for the 41st consecutive month. Petroleum and coal products saw price rises of 2.7% versus July of last year.

Finally, US auto sales hit their lowest total in nine years in June, which is sure to make exporters nervous. However, Japanese automakers are getting a bigger slice of the pie;the market share of Detroit’s big three automakers fell below 50% for the first time ever.

Bank of Japan: May Corporate Services Price Index up 1.4%

The Bank of Japan’s Corporate Services Price Index rose 1.4 percent in May, according to figures published yesterday. This is the tenth consecutive increase in the index, and last month’s pace of growth was the highest seen since July 1992 (when the consumption-tax fueled rise of 1997 is factored out).

Amongst the category headers, transportation prices led the way, up by 6.0 percent. Following that:

• Other services were up 1.0 percent.
• Information services were up 0.9 percent.
• Communication and broadcasting prices were unchanged.
• Leasing and rental was down 1.0 percent.
• Advertising services were down 2.0 percent.
• Finance and insurance fell 0.6 percent.
• Real estate services fell 0.8 percent.

It should be noted that the rise in transportation prices, which drove the overall increase, was attributed to exports of coal and iron ore to China. In other words, Chinese demand certainly plays a role in these figures.

Could that be a mitigating factor that prevents this from being a sign pointing to an August rate hike? Does it matter? The Nikkei’s most recent poll of 33 private sector economists finds 14 expecting a rate hike in August. That’s 42 percent. One even predicted a July rate hike (Ballsy! With the Upper House election and all? This might be someone who’s really in the know.) All of those who answered the poll expect to see an increase in the interest rates before New Year’s time.

Given that two didn’t answer the Nikkei, that puts 45% predicting the August rate hike. Count me in.

Copyright © 2006-2008 Japan Economy News

Disclaimer