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Economy in Brief
U.S. Housing Affordability Declines Further in June
The NAR Fixed Rate Mortgage Housing Affordability Index fell 3.6% in June...
EMU Output Makes Solid Gain in June
The European Monetary Union posted a 0.7% increase for industrial output in June...
U.S. Producer Prices Fall During July; Core Increase Weakens
The Producer Price Index for Final Demand fell 0.5% during July...
U.S. Unemployment Claims Continue on an Uptrend
Initial claims for unemployment insurance filed in the week ended August 6 rose 14,000 to 262,000...
RICS Survey Points to More U.K. Housing Sector Weakness
The survey of housing market conditions in the U.K. continues to show strength in prices versus weakness...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Louise Curley August 13, 2007
On July 12, Toshihiko Fukui, Governor of the Bank of Japan said that slow growth in the second quarter would not determine the outcome of the August 22 and 23 monetary policy meeting. However, the unexpectedly big slowdown in real GDP, from a revised 3.2% annual rate in the first quarter to 0.5% annual rate in the second quarter may weaken his resolve to raise the key overnight lending rate from 0.5%.
The disappointing report was the result of a decline in fixed capital formation, a deceleration in net exports of goods and services and private consumption. In addition, private sector inventories declined in the second quarter. The changes in the major components of real GDP are shown in the first chart.
While the GDP report gives little support for a rise in interest rates a determined BOJ could cite the rise in deflator for domestic demand, the preferred measure of inflation.The second chart shows the year to year changes in the total GDP deflator and those in the Domestic Demand Deflator. The total deflator has yet to show a year to year increase but the domestic demand deflator rose 0.1% in the second quarter, the third positive showing over the past seven years. Even so this hardly constitutes strong evidence that inflation is a near term threat.
Japan Gross Domestic Product | Q2 07 | Q1 07 | Q2 06 | Q/Q Chg | Y/Y Chg | 2006 | 2005 | 2004 |
---|---|---|---|---|---|---|---|---|
Real GDP (Trillion 2000 Chained Yen | 560.2 | 559.4 | 547.5 | 0.54 | 2.31 | 548.9 | 537.2 | 527.3 |
Current GDP (Trillion Yen) | 516.7 | 515.3 | 506.7 | 1.05 | 2.04 | 507.7 | 501.4 | 498.5 |
Components of Real GDP | ||||||||
Private Consumption (Trillion 2000 Chained Yen) |
309.2 | 308.1 | 305.2 | 1.41 | 1.31 | 304.2 | 301. | 297.1 |
Fixed Capital Formation (Trillion 2000 Chained Yen) |
130.0 | 130.1 | 127.0 | -0.39 | 2.36 | 127.6 | 123.4 | 120.5 |
Exports of Goods and Services (Trillion 2000 Chained Yen) |
85.7 | 85.0 | 79.7 | 3.47 | 7.55 | 80.6 | 73.5 | 68.8 |
Imports of Goods and Services (Trillion 2000 Chained Yen) |
61.6 | 61.1 | 60.8 | 3.10 | 1.21 | 60.5 | 57.9 | 54.7 |
Deflators (2000=100) | ||||||||
Total | 93.7 | 91.0 | 93.9 | -- | -0.21 | -- | -- | -- |
Domestic Demand | 96.4 | 93.3 | 96.3 | -- | 0.10 | -- | -- | -- |