Bright news on the next quarter
A bit of good news is coming from, unexpectedly, Japan, which predicts that the next quarter, namely January to March, sees a stronger growth in the world, especially Asia. Unfortunately, it isn't that Japan has finally escaped from a trap of chronicle deflation started in the early 2009, though the consumer price index released today shows that deflation is gradually moderating in the country.
The overall consumer price index rose 0.1% in November from the previous year, the second consecutive month of positive growth after twenty months of decline. The core consumer price index, which excludes volatile products like fresh foods from the overall index, decreased 0.5% from the previous year, but it is the smallest decline in nineteen months. Deflation is, albeit very slowly, on the mend.
Meanwhile, the index of industrial production rose 1.0% in November from the previous month, the first gain in six months. It is the same with a median forecast. A bit of surprise is that manufacturers expect a stronger growth of production in the months ahead according to a survey conducted by the METI. Output is forecast to increase 3.4% in December from the previous month, and 3.7% in January.
It is likely that this strong growth in output is based mostly in Asia's demand, which was evidenced in the last month's exports report. Japan's exports grew 9% in November over the year, the first acceleration in nine months. The biggest contributor is Asia, which claims nearly 80% of total growth, whereas North America's contribution is mere 0.3% and shares a modest 3% of total growth. The US economic recovery is still too anemic to bring a robust support for Japan.
Given a highly positive correlation between Japan's and the US output, the latter is also likely to be underpinned in the next quarter by a strong demand in Asia. The recent rise in the US interest rates would herald a robust growth in the US.
The overall consumer price index rose 0.1% in November from the previous year, the second consecutive month of positive growth after twenty months of decline. The core consumer price index, which excludes volatile products like fresh foods from the overall index, decreased 0.5% from the previous year, but it is the smallest decline in nineteen months. Deflation is, albeit very slowly, on the mend.
Meanwhile, the index of industrial production rose 1.0% in November from the previous month, the first gain in six months. It is the same with a median forecast. A bit of surprise is that manufacturers expect a stronger growth of production in the months ahead according to a survey conducted by the METI. Output is forecast to increase 3.4% in December from the previous month, and 3.7% in January.
It is likely that this strong growth in output is based mostly in Asia's demand, which was evidenced in the last month's exports report. Japan's exports grew 9% in November over the year, the first acceleration in nine months. The biggest contributor is Asia, which claims nearly 80% of total growth, whereas North America's contribution is mere 0.3% and shares a modest 3% of total growth. The US economic recovery is still too anemic to bring a robust support for Japan.
Given a highly positive correlation between Japan's and the US output, the latter is also likely to be underpinned in the next quarter by a strong demand in Asia. The recent rise in the US interest rates would herald a robust growth in the US.
posted by Akihiro Gotoda at
5:39 PM
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