Japan's Retail Sales Continue to Post Growth

Japan's retail sales, exports and employment trends continue to move higher and to point higher. But only employment shows a steady acceleration from 12-months to six-months to three-months, growing at successively faster rates on that timeline. Despite that trend, employment gains have become spotty in recent months.

Classical economic measures
Year-on-year changes show strong retail sales gains that reside in the top 10% of historic results. Exports have only a 40.7 queue standing, below their historic median (the median occurs at a rank standing of 50%). Employment has only a 12.9 percentile standing, a very weak result undoubtedly a by-product of the coronavirus affecting the most the service sector that is the job sector. The accounting style data in the top of the table show consistent growth but not much strength. Japan's economy is still trying to find a higher gear.

Indicators
The indicators and forward-looking assessments in the table show more mixed performance. All indictors are stronger month-to-month in February, but this comes after they all had weakened in January. The three-month average for the indicators shows weakening in three of four measures with the only improvement coming from the service sector over three months compared to six months. But even with that, the service sector remains weak.

Indicator rankings are weak
The levels of the indicators all are below their respective medians (all are below a standing of 50%). The economy watchers index, the Markit services gauge and consumer confidence are especially weak with each of these measures showing a rank standing in its lower 15th percentile. They have been weaker only about 15% of the time- that's not going to drive growth anywhere you want to go. The Markit manufacturing PMI is close to its median with a 49.0 percentile standing. That is hardly strong, but it says that conditions in manufacturing are closer to some view of normalcy.

Virus update
Despite ongoing improvement in the service sector, Japan's new infection rate is gathering momentum. It is down sharply from its early-January peak. But after hitting a low in late-February, new cases are double that lowered pace in the most recent data. Japan's reinfections are a real phenomenon and perhaps are more worrisome because Europe is going through a clear third wave of infections itself and because new variants are also in circulation globally. If a new wave develops, it may take a while to figure out if the old virus has recirculated or if one of the new variants has taken over. And the variants can be nasty and spread much more quickly. That is what has health officials on their toes and wary when a fall off from a peak infection rate fails to continue to recede to very low levels and stay there. Japan is such a case. Japan's deaths curve, that typically lags the infections curve, continues to work its way lower, however. That much is good news. Japan has other concerns as well. It is worried about the new EU ruling that would allow it to block the export of vaccines. Japan's vaccine minister Taro Kono is urging the EU to ensure stable shipments of the vaccine to Japan.