Japanese inflation, labor demand, and industry signal strong economic recovery

Home page News Japanese inflation, labor demand, and industry signal strong economic recovery
The basic value of Japanese inflation accelerated growth in August, industrial output rose more than expected, the demand for labor assets was strongest in more than 40 years, which indicates a strong impetus for the third world economy. A whole series of data can create momentum for optimism about growth prospects, although the decision of Prime Minister Shinzo Abe to hold early elections has increased the degree of uncertainty around economic policy.

There is also some concern about monetary policy in general, since the last meeting of the Bank of Japan showed that one of the board members wanted to expand incentives, as consumer inflation remained far from the target of 2% of the Central Bank. The basic value of the consumer price index (CPI), which includes the prices of petroleum products, but excludes volatile fresh food, increased by 0.7%, corresponding to the average market estimate. This was the eighth consecutive month of growth in the index following 0.5% growth in July.

Industrial output showed a more substantial growth of 2.1% in August from last month, as manufacturers of construction equipment, automobiles and electronic components produced more goods. Industrialists surveyed by the government expect a decline in production of 1.9% in September, and then a rise of 3.5% in October. Nevertheless, prices and wage growth remained weak, and companies are still afraid to pay their employees more, which again forces the Central Bank to postpone further its plans to achieve the goals of the massive incentive program launched in 2013. The Bank of Japan expects inflation at 2% at the end of fiscal 2020, arguing that growth in the labor market and strong economic growth will gradually lead to stronger prices.