Global| Oct 21 2014Japan's All Industry Index Erodes
Summary
Japan's economy continues to be weak. The government has downgraded its assessment of the economy. The Bank of Japan has downgraded one of its regions. The government is undergoing pressure as two ministers having just resigned under [...]
Japan's economy continues to be weak. The government has downgraded its assessment of the economy. The Bank of Japan has downgraded one of its regions. The government is undergoing pressure as two ministers having just resigned under a cloud of suspicion. On top of that, economic data continue to weaken.
Japan's all-industry index for August fell to a level of 95.6 from 95.7 in July- a tiny drop but part of a broad and ongoing process of weakening. The moving average of this index from 12 months to six months to three months continues to register lower readings. The rank or queue standing of the all-industry index is in its 25.9 percentile. This means the index has been weaker only about 26% of the time. The construction component and the mining and manufacturing component both are below their respective 25th percentile standing mark. Mining and manufacturing is a sector that has been weaker only about 13% of the time. The tertiary sector, which refers to services, stands in its 54th percentile above its historic median (at 50%) , but not by much.
The construction sector continues to post progressively weaker moving averages from 12 months to six months to three months. The mining and manufacturing sector is posting substantially weaker readings from 12 months to six months to three months. And, despite its higher standing, the tertiary index to showing erosion in its moving average weakening from 12 months. Versus six months versus three months.
In short, there's not much good news from Japan's sector indices. The construction sector once was a source of strength as rebuilding occurred in the wake of the tsunami; now construction is fading and standing at a low historic level. Mining and manufacturing, too peaked, shortly after construction sector lost momentum and that sector continues to lose momentum. The tertiary sector also is losing momentum. But it is doing so very slowly. Japan's economy is without a source of strength. Its Central Bank is engaged in its increasingly controversial policy of quantitative easing as the government is under political pressure.
The message is quite clear here. Japan's economy struggling. And, Japan's economy is going to continue to struggle. At the present time, Japan is losing this struggle - just about on every front.
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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