Q3 Contraction Likely Despite Recent Upturn in Japanese Data

Japan’s retail sales exceeded expectations yesterday, raising hopes that private consumption started recovering from April’s sales tax hike.
Today, industrial production came in better than expectations, increasing 2.7% in September. This compared with expectations for a 2.2% rise.
Nevertheless, the economy is likely to have contracted in Q3, which would make it harder for the government to go ahead with raising the consumption tax again.
Bank of Tokyo Mitsubishi’s Halpenny says on Wednesday: “As PM Abe deliberates on whether to implement the second sales tax increase in October 2015, the data flow is certainly improving from Japan. Industrial production jumped 2.7% in September after a fall of 1.9% in August. However, that wasn’t enough to avoid a 1.9% contraction in Q3 after a 3.8% contraction in Q2. PM Abe will at least be reassured that the economy looks to be improving although the Q3 GDP rebound may still disappoint and place political pressure on Abe for a delay.”

Published: 2014-10-29 12:59:00 UTC+00

Q3 Contraction Likely Despite Recent Upturn in Japanese Data