Hiroshi Inoue

MNI discusses the BOJ's private consumption outlook.

MNI discusses the BOJ's GDP outlook.

Japan's exports rose for a 10th consecutive month in June, increasing 19.3% y/y after a 16.8% gain in May, driven by strong shipments of automobiles, semiconductors and related goods, and nonferrous metals, Ministry of Finance data showed Wednesday.Automobile exports rose 23.0% y/y in June after increasing 13.7% in May, while exports of semiconductors jumped 53.8% following a 61.2% rise, reflecting continued robust global demand for IT-related goods.Imports increased 25.4% y/y, extending gains to a fifth straight month after rising 12.5% in May. Meanwhile, imports of petroleum from the Middle East fell 40.6% following a 61.9% decline in May.Japan recorded a trade deficit of JPY406.9 billion in June, following a revised JPY391.8 billion deficit in May, as elevated energy import costs continued to weigh on the trade balance.Exports to China, Japan's largest trading partner, rose 17.6% y/y, marking a fourth consecutive monthly increase after a 17.9% gain in May.Exports to the United States increased 13.0% y/y for a fourth straight month after rising 12.3% in May, led by a 34.5% jump in automobile shipments following an 18.7% increase the previous month.

MNI discusses the BOJ's hiking strategy.

We use cookies This website uses cookies and other tracking technologies to improve your browsing experience for the following purposes: to enable basic functionality of the website

Japan's services producer price index (SPPI) rose 3.2% y/y in June, easing from May's revised 3.4%, indicating companies continued to pass higher costs on to customers while private consumption remained resilient, preliminary Bank of Japan data showed Monday.: https://www.boj.or.jp/en/statistics/pi/cspi_release/sppi2606.pdfThe increase was driven mainly by transportation and postal services, particularly ocean freight transportation (+52.8% y/y vs. +61.8% in May), while advertising services fell 1.3% y/y after rising 1.9% the previous month.The SPPI fell 0.4% m/m in June after being unchanged in May.The data suggest firms continue to pass higher material and labour costs on to customers, keeping pressure on household living costs.Businesses are expected to continue raising selling prices, with the number of price increases likely to pick up from October.The index for labour-intensive services rose 2.7% y/y in June, up from 2.6% in May, while the index for less labour-intensive services slowed to 3.7% from 4.6%, suggesting wage increases are continuing to feed into prices but have yet to gain significant momentum.BOJ officials judge that services prices continue to rise as firms pass higher labour and distribution costs on to customers, although the pace of services inflation has not accelerated sufficiently to support the bank's goal of achieving stable 2% inflation driven by domestic demand.The Bank is closely watching whether services inflation strengthens further following corporate price revisions in or after July, when firms tend to adjust prices more flexibly in response to changes in input costs.

The BOJ Board will deliver its latest policy rate decision on Friday.

Japan's industrial output rose 1.3% m/m in June, marking a third consecutive monthly increase after May's 0.1% gain, driven by higher manufacture of production machinery, electrical machinery and information and communication electronics equipment, as well as automobiles, Ministry of Economy, Trade and Industry data showed Friday.: https://www.meti.go.jp/english/statistics/tyo/iip/index.htmlAutomobile production rose 1.1% m/m in June, extending May's 0.7% increase, while production machinery output jumped 7.6%, rebounding from a 3.5% decline in May.Based on its survey of manufacturers, METI projects industrial production will rise 1.2% in July, revised up from its previous estimate of no growth, before increasing a further 4.5% in August.After adjusting for the typical upward bias in manufacturers' forecasts, however, METI estimates output will decline 0.7% m/m in July.Under that assumption, and if September production is unchanged from August, industrial output would rise 3.2% q/q in Q3, marking a fourth consecutive quarterly increase after being flat in April-June.Economic activity has remained resilient as supply chains have not been significantly disrupted and firms continue to secure alternative sources of raw materials.While the production outlook remains firm, BOJ officials are closely monitoring the impact of Tuesday's earthquake in Kumamoto Prefecture. The quake disrupted semiconductor and automobile production in the industrial hub, affecting operations at Taiwan Semiconductor Manufacturing Co., Toyota Motor and other manufacturers.Industrial output is a key indicator for BOJ economists in assessing the strength of the recovery, as it reflects both domestic and external demand.

The Bank of Japan, as widely expected, left its policy rate unchanged at 1.0% on Friday as policymakers continued to assess the impact of June's rate increase on economic activity and financial conditions.The decision was approved by an 8-1 vote. Board member Hajime Takata dissented, proposing a 25-basis-point increase to 1.25%, but his motion was rejected by the majority.Market participants continue to expect the BOJ could raise the policy rate to 1.25% as early as September, citing the yen's persistent weakness and upside risks to inflation, although it remains uncertain whether such a move would be supported by the government.The BOJ maintained its guidance that it will continue to raise the policy rate gradually if the economy and prices evolve in line with its outlook, noting that underlying inflation is moving closer to its 2% target and that financial conditions remain accommodative. (See MNI BOJ Board To Hold, Ueda's Stance In Focus: https://www.mnimarkets/articles/mni-boj-watch-board-to-hold-uedas-stance-in -focus-1785208007307)The bank also reiterated its view that underlying CPI inflation is likely to converge to its 2% price target during the second half of fiscal 2026 and through fiscal 2027.

The BOJ left its policy rate on hold in an eight-one decision.