Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19
US China Trade Issues Will Drive Market Trends – PART II - 14th May 19
The Exter Inverted Pyramid of Global Liquidity Credit risk, Liquidity and Gold - 14th May 19
Can You Afford To Ignore These Two Flawless Gold Slide Indicators? - 14th May 19
As cryptocurrency wallets become more popular, will cryptocurrencies replace traditional payments? - 14th May 19
How US Debt Will Reach $40 Trillion by 2025 - 14th May 19
Dangers Beyond a Trade War with China - 14th May 19
eBook - Greatest Tool for Trading? - 14th May 19
Classic Pitfalls for Inexperienced Traders - 14th May 19
Stock Market S&P 500 Negative Expectations Again - 13th May 19
Why Rising Living Standard in China Offers Global Hope - 13th May 19
Stock Market Anticipated Correction Starts On Cue! - 13th May 19
How Chinese Trade Issues Will Drive Stock Market Trends - 13th May 19
Amazon SCAM Deliveries for Fake Verified Purchaser Reviews "Brushing" - 13th May 19
Stock Market US China Trade War Panic - Video - 13th May 19
US Stock Market Leading Macro Economic Indicators Update - 12th May 19
SAMSUNG - BC94.L - Investing in AI Machine Intelligence Stocks - 11th May 19
US Increases Trade Tariffs Against China – Stock Markets, Gold, and Silver - 11th May 19
Who Has More To Lose In A No Deal Brexit? - 11th May 19
Gold at $1,344 Will Start Real Fireworks on the Upside - 11th May 19
Make America’s Economy Great Again - 10th May 19
Big US Stocks’ 2019 Fundamentals - 10th May 19
Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - 10th May 19
Stock Market Shake-Out Continues – Where Is The Bottom? - 10th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Japan Economy GDP Growth Recovery, Too early to celebrate?

Economics / Japan Economy Feb 17, 2010 - 06:20 AM GMT

By: Fresbee

Economics

Best Financial Markets Analysis ArticleHigh growth at 1.1% QoQ (4.6% saar) in 4Q 2009 The Japanese economy grew 1.1% QoQ after seasonal adjustment (or 4.6% saar) in 4Q (Oct-Dec) 2009, higher than DB forecast (0.7%; 2.8%). The noteworthy development is that private consumption registered the third consecutive quarterly increase (0.7% QoQ) thanks to fiscal stimulus on the purchase of consumer durables and that private capital investment recovered for the first time in seven quarters (1.0% QoQ).


Meanwhile, public investment fell 1.6% QoQ for two consecutive quarters, due mainly to the end of front-loaded spending of the FY 2009 budget and the partial cutback of the budget by the DPJ. Exports grew for three consecutive quarters at 5.0% QoQ, but the pace of expansion has been slowing to a more sustainable rate. Nominal GDP rose 0.2% QoQ for the first time in seven quarters. However, both GDP deflator and domestic demand deflator fell 0.9% QoQ, maintaining the declining trend in prices.

Prices are a lagging indicator of the business cycle. It would require sustained economic expansion for the prices not to fall further.

Proactive monetary easing less likely

The Bank of Japan has maintained a cautious stance toward aggressive monetary easing by arguing that quantitative monetary easing is not effective to stimulate economic activity, and that downward forces on prices should fade as economic recovery continues. The GDP statistics for 4Q 2009 would reinforce their view.

We think the probability of proactive monetary easing has further fallen.

Labor share and unit labor cost fell

The labor share has fallen from 53.5% in 3Q 2009 to 52.8% in 4Q. The unit labor cost has fallen 2.4% QoQ for
three consecutive quarters, while the labor productivity rose 1.8% QoQ. These indicators are all affected by the business cycles and their movement in 4Q seems reasonable in their directions. However, nominal compensation of employees has still fallen by 1.2% QoQ in 4Q for seven consecutive quarters. Compared with the weakness in wages, the changes in the above three indicators look limited. We do not think that labor market adjustment has finished.


Fall-off of policy stimulus vs private capital investment recovery

While the Japanese economy remains on track for the export-driven recovery, its phase of accelerating recovery appears ending, which should be followed by a cruising-speed expansion.

We focus on the following from now:

1) the degree of the fall-off of policy stimulus on consumer durables,

2) the degree of acceleration in the pace of recovery in private capital investment, and

3) traction of export expansion to non-manufacturing industries. In general, a subsidy to the purchase of consumer durables influences the timing of consumption, which accompanies front-loaded demand prior to the deadline and an ensuing fall of the same size after the deadline.

The “eco-car subsidies” are scheduled to end in the end of September and the “eco points” in the end of December. It seems difficult for consumption to sustain QoQ growth until these deadlines arrive and thus reasonable to assume that the falloff of demand would take place toward the end of 2010. This could constitute the soft patch of the business cycle around the end of 2010. Private capital investment has been recovering, mainly led by machinery and equipment for export-related industries. Investment in structures and buildings for domestic demand looks flat at best, and tends to lag behind investment in machinery and equipment. Capital investment is influenced by the capacity utilization in the short-run and by the potential growth of the economy over the long-run. For the attitude of the business sector toward capital investment to turn positive, it will require longer time.

The overall pace of capital investment recovery in 2010 will be moderate in our view. In the previous recovery phase, the traction of recovery into non-manufacturing sectors began in the third year. Since year 2010 is the second year of recovery, it might be premature for the similar traction to take place in the non-manufacturing industries during this year.

Source: Central committee, GS, MS, DB Research

Source : http://investingcontrarian.com/global/japan-gdp-too-early-to-celebrate/

Fresbee
http://investingcontrarian.com/

Fresbee is Editor at Investing Contrarian. He has over 5 year experience working with a leading Hedge fund and Private Equity fund based out of Zurich. He now writes for Investing Contrarian analyzing the emerging new world order.

© 2010 Copyright Fresbee - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules