Global| Feb 16 2011Japan's Tertiary Sector Contracts in December
Summary
Japan's three main sectors MFG, Construction and Services have not been making much headway. It is not surprising that Japan's GDP contracted again in Q4. But the Teikoku sector indices which are plotted in the graph above shows a [...]
Japan's three main sectors MFG, Construction and Services have not been making much headway. It is not surprising that Japan's
GDP contracted again in Q4. But the Teikoku sector indices which are plotted in the graph above shows a slightly more optimistic
picture than the METI indices on sectors. In their setting the Teikoku indices took a set back early in the year but have
re-grouped and are growing again, albeit more slowly.
Still the Teikoku readings are weak. The service and construction indices stand below the 40th percentile of their respective ranges. Wholesaling and manufacturing are the strong sectors and at that they are just short of residing in the 60th percentile of their respective ranges. Japan's retail sector hovers just below the 50th percentile of its range.
Still, as the table shows the LEI stands in the 97th percentile of its range; it is a much more upbeat and forward looking measure.
The BoJ has changed its outlook of the economy. It is beginning to say this episode of deflation is being put behind it and sees progress in the economy at large. Perhaps Japan's Q4 decline in GDP will prove to be an isolated quarter of bad news for Japan. While that is possible Japan's economic signals continued to be murky and not vibrant. Japan is locked into China's orbit since China is its largest trading partner and China is struggling, comparatively. It is too soon to get too optimistic on Japan but maybe not be too soon to think about getting optimistic on Japan.
| Key Japanese Surveys | |||||||
|---|---|---|---|---|---|---|---|
| Raw Readings of each Survey | Percentile of 10Yr Range* | ||||||
| Dec-10 | Nov-10 | Oct-10 | Sep-10 | Dec-10 | Nov-10 | Oct-10 | |
| Diffusion | |||||||
| Economy Watchers | 45.1 | 43.6 | 40.2 | 41.2 | 70.5% | 66.9% | 58.7% |
| Employment | 51.1 | 51.2 | 49.1 | 51.4 | 74.7% | 74.9% | 71.2% |
| Future | 43.9 | 41.4 | 41.1 | 41.4 | 67.4% | 61.0% | 60.3% |
| Econ Trends (Teikoku'/50 neutral/weighted diffusion) | |||||||
| MFG | 34.9 | 34.4 | 33.4 | 35.4 | 58.8% | 56.9% | 53.2% |
| Retail | 30.7 | 30.7 | 29.6 | 31.8 | 49.5% | 49.3% | 44.2% |
| Wholesale | 33.6 | 32.7 | 31.9 | 32.8 | 57.5% | 53.6% | 48.6% |
| Services | 33.6 | 33.1 | 32.4 | 33.1 | 39.6% | 38.1% | 35.5% |
| Construction | 26.5 | 26.2 | 25.2 | 26.0 | 39.8% | 38.4% | 32.2% |
| Key Japanese Sector Surveys | |||||||
| Raw Readings of each Survey | Percent of 10Yr Range* | ||||||
| Indices | Dec-10 | Nov-10 | Oct-10 | Sep-10 | Dec-10 | Nov-10 | Oct-10 |
| Industry | 94.8 | 91.8 | 90.9 | 92.8 | 60.5% | 52.7% | 50.4% |
| Tertiary(services) | 97.7 | 98.5 | 98.0 | 97.7 | 36.3% | 45.1% | 39.6% |
| LEI | 101.4 | 100.6 | 97.7 | 98.8 | 97.5% | 94.7% | 84.6% |
| percentiles: 100 is high; Zero is low | |||||||
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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