Haver Analytics
Haver Analytics

Economy in Brief: February 2022

    • Consumer spending & employment growth slow.
    • Housing starts ease but vehicle sales pick up.
    • Price inflation moderates yet interest rates rise.
    • Component weakness pronounced in production & new orders.
    • Employment weakens significantly.
    • Pricing power softens.
  • Japan
    | Feb 28 2022

    Japan's IP Falls Again

    Japan's industrial output fell by 1% in January after tumbling 0.8% in December. Still, output has a strong 18.7% (annualized) gain over three months on the strength of a 6.3% monthly gain in November. However, output is falling by 1.3% over 12 months and by 6.8% over six months.

    In the quarter-to-date industrial output is up at a 2.6% rate, but that is all from the momentum generated back in November.

    Manufacturing is following the same pattern as overall IP on this timeline.

    Sectors show declines in consumer goods output and in output of intermediate goods in January as well as in December. Both also showed very sharp monthly gains in November. Both sectors show double-digit annualized growth rates of gain in the last three months while their growth rates are negative over six months and 12 months.

    Investment goods are off on their own tangent. The output of investment goods rose by 1.8% in January, fell by 2.7% in December and rose by 2.8% in November. Investment goods show a gain in output over 12 months, a fall in double digits over six months and a strong but single-digit annualized gain over three months.

    In the quarter-to-date, output falls for consumer goods but is rising for intermediate goods and for investment goods.

    The mining sector shows output increases in two of the last three months but logs a drop over three months, six months and 12 months. And those declines are increasing more severely. Mining output also is falling in the quarter-to-date.

    Looking at output changes since before Covid struck, the headline, manufacturing and all sectors are still lower on balance. Japan has not recovered to its pre-Covid level of activity and that means since that a two-year period there has been no growth either as would normally occur for a two-year period.

    • General business activity at a four-month high and company outlook up but at a lesser extent.
    • Production declines slightly, still suggesting above-average output growth.
    • New orders growth holds steady, albeit at an above-average level.
    • Current employment at a one-year low but still at an elevated level; future employment down slightly.
    • Price received at a four-month high and price paid at a three-month high; both near record levels.
    • Pending home sales weaken to lowest level in nine months.
    • Sales fall in most of country.
    • January increase led by strong nondefense aircraft orders.
    • December decline revised up from decrease to a meaningful increase.
    • Core capital goods shipments up 1.9% m/m, pointing to a solid beginning for Q1 equipment spending.
    • Strong goods purchases follow December's weakness.
    • Core price inflation remains steady & strong.
    • Wage & salary growth eases slightly.
    • January CFNAI at 0.69, a three-month high, indicates a pickup in U.S. economic growth.
    • Two of four components decline slightly, but all four show positive readings.