FJP - Mixed Japanese Data Supports BoJ's Policy Normalization
2024-05-31 09:20:00 ET
Summary
- We’d rather downplay the weaker-than-expected manufacturing data and focus on a solid recovery in retail sales and a reacceleration in inflation, which will be welcomed by the Bank of Japan.
- Inflation has been quite choppy due to various government programmes and utility prices.
- We believe that today’s data results, particularly the stronger-than-expected retail sales and reacceleration of inflation, support our view that the Bank of Japan will deliver another rate hike in July.
By Min Joo Kang
Disappointing industrial production data
Manufacturing activity in Japan unexpectedly declined -0.1% MoM, seasonally adjusted, in April (vs 4.4% in March, 1.5% market consensus). Transportation equipment declined 1.1% in April with a 0.6% drop in motor vehicles, but this is after a 9.9% surge in March. We believe this is a temporary adjustment and expect a rebound in the coming months as carmakers get production back on track. Other than transportation equipment, production machinery remained strong. Semiconductor-related equipment firmly rose again, suggesting robust demand for semiconductors continued....
Mixed Japanese Data Supports BoJ's Policy Normalization