Pieces Falling In Line For Rate Hike From Japan by Angelo F. DeJoy
The Nihon Keizai Shimbun released the results of a survey performed on June 12 today, which revealed that summer bonuses this summer rose by 1.16% over the summer of 1999. Amid impressive profit growth among Japanese firms, where Jan Mar profits rose 38%, firms have been increasing capex, which rose in the Jan Mar period by 4.2%.
The rise in summer bonuses is likely be supportive of the yen, given that the BoJ said recently that it sees summer bonuses as a key component to determine whether deflation is easing and when the Bank should move from its 16 month zero interest rate policy. Further evidence coming from Japan trade data suggests deflation in Japan may soon be that of the past. The MoF said today that Japan?s Custom Cleared Trade Surplus fell in May by 29.0% on the year to 582.4 billion yen, well below expectations of about 800 billion yen. Although exports rose by 8.2%, the seventh straight rise amid a strengthening Asia, imports rose a whopping 19.4% on the year due to soaring oil prices and increased domestic demand. Yesterday, the EPA upgraded its assessment of the economy amid movement toward self-sustaining recovery, mainly on corporate activity was slightly more optimistic than last month?s report, which said only that such movement was gradually appearing. The report added that the fall in consumption was showing signs of coming to halt, adding that the drop in household incomes is nearing an end.
-June 20 |
