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Economy in Brief

Japan Retail Sales Edge Back in Sept...Is Slowing Trend Still in Place?
by Robert Brusca October 29, 2007

Real retail sales surged in August but they fell in September. Still, the combination leaves retail sales net better off over the past two months. The Yr/Yr chart (real retail sales) shows that the downtrend that has been in place is blunted by these recent movements. Still retail sales in the quarter are going to be lower; they are falling at a 3.2% annual rate in Q3. The main nominal measures show distinct slowing as well.

Japan continues to be caught in between as the central bank looks for recovery and anticipates rate hikes and as the government plans for tax hikes to address Japan's excessive fiscal situation. Yet the economy, after a few hopeful quarters, has failed to deliver on the promise of growth and failed to let either of these policy moves occur. Moreover, the backsliding on the inflation front is a clear reminder of how fragile this economy is. The ongoing weakness in the yen should be a constant reminder of Japan’s weakness as export growth continues to drive growth. In short, Japan’s retail sales in September are not so encouraging despite the fact that they let much of the August strength stand.

Japan Real and Nominal Retail Sales
Nominal Sep-07 Aug-07 Jul-07 3-MO 6-MO 12-MO YrAGo QTR Q3
Saar
Retail Total -0.6% 3.6% -2.8% 0.8% 1.6% 0.5% 0.5% -3.0%
Motor Vehicles and Parts -6.5% 8.0% -0.4% 2.3% -1.9% 0.0% -6.9% 3.4%
Food Beverages & Tobacco 0.9% 1.2% -1.0% 4.7% -1.4% 0.4% 1.8% -2.6%
Clothing footwear -0.4% 8.7% -8.3% -3.1% 0.4% -1.1% -1.5% -10.9%
Real                
Retail Total -1.5% 3.9% -2.5% -0.8% -0.2% 0.5% -0.1% -3.2%
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