Confidence amongst Japanese businesses deteriorated over the first three months of 2019, according to the Bank of Japan’s (BoJ’s) quarterly Tankan survey of business sentiment. Optimism amongst large manufacturers fell more heavily than expected, compounding concerns about the growth outlook for Japan’s export-led economy
- Japan’s industrial production and export activity was weak in February
- Core CPI eased to 0.7%
- Australia’s economic growth slowed
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Confidence amongst Japanese businesses deteriorated over the first three months of 2019, according to the Bank of Japan’s (BoJ’s) quarterly Tankan survey of business sentiment. Optimism amongst large manufacturers fell more heavily than expected, compounding concerns about the growth outlook for Japan’s export-led economy as the slowdown in China’s economic expansion continues to take its toll across the region. Looking ahead, Japanese policymakers are likely to be vigilant to evidence of a slowdown ahead of this autumn’s increase in consumption tax.
“Australia’s policymakers face something of a conundrum”
The Nikkei 225 Index fell by 0.8% during March, while the Topix Index declined by 1% and the Tokyo Second Section Index fell by 0.8%.
Japan’s Government lowered its evaluation of the country’s economy, highlighting weakness in industrial production and exports activity. Industrial production posted month-on-month growth of 1.4% during February, boosted by cars, production machinery, and electrical machinery. On an annualised basis, however, industrial output fell by 1%. Meanwhile, exports fell for a third consecutive month in February, declining at an annualised rate of 1.2%. Elsewhere, retail sales slowed during February, rising at a monthly rate of 0.2% compared with January’s rate of 1.8%. The annualised rate of core consumer inflation eased to 0.7% in February, well below the BoJ’s target of 2%.
Australia’s policymakers face something of a conundrum: slowing economic growth alongside a tightening labour market and high levels of government spending. The country’s economy expanded at an annualised rate of 2.3% during the fourth quarter of 2018, compared with the Reserve Bank of Australia’s (RBA’s) February forecast for full-year growth of “a bit below 3%”. Growth was hampered by construction and household spending, which were in turn dampened by declining property prices. On a quarter-by-quarter basis, the economy expanded by 0.2%. In a speech on the housing market during the month, RBA Governor Philip Lowe said: “Businesses are investing and they’re employing people … The puzzle we’re grappling with at the moment is where’s the associated spending and output?”
Australia’s Treasurer, Josh Frydenberg, said that 2018 had been “a calendar year of two halves when it comes to growth; strong quarters in March and in June, and less than that in the September and December quarters … off the back of a slowing in housing and construction and also the impacts of the drought.” The ASX All Ordinaries Index edged 0.1% higher during March.
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