Japan CPI Falls in August

Japan’s manufacturing contracted further in August, dropping 1.3 percent from the previous month on weakening auto and electronics output, as anti-Japanese riots in China darkened an already bleak outlook for both economies.

Data released Friday also showed core consumer prices, excluding food, continued to fall last month in another sign that Japan, the world’s third-biggest economy, remains in the doldrums.

The weaker industrial output is the fourth straight month of decline and reinforces expectations that Japan’s growth will shrink in the quarter that ends in September. It follows a 1.2 percent decrease in July.

The lift some Japanese industries got from reconstruction following the March 2011 earthquake and tsunami is waning as rebuilding slows following the initial rush.

Given these factors, Japan’s central bank followed the lead of the U.S. Federal Reserve last week in extending its monetary easing, hoping to help spur lending and other business activity while forecasting that the recovery could pick up momentum late in the year.

Japan’s industrial production fell 4.3 percent in August from a year earlier, as factories reduced output of electronics and components, communications equipment, chemicals and large passenger cars, the Ministry of Economy, Trade and Industry said.

Output is expected to fall further, by 2.9 percent, in September, the ministry said, a forecast that likely takes the China problem into account, and to remain flat in October. Although Chinese authorities have acted to quell the recent anti-Japanese turmoil, it forced many factories to close temporarily and is hitting sales of Japanese-brand vehicles, further darkening the outlook for manufacturing.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza