Japan’s economic recovery gained momentum last month as manufacturing accelerated and consumer prices rose for a second straight month, despite weaker household spending and retail sales.
The data released yesterday showed the consumer price index (CPI) rose 0.7 percent last month from a year earlier, for the second straight month of gains. That suggests efforts to break free of years of demand-dampening deflation are progressing. The CPI rose 0.2 percent in June.
However, the core index, which excludes food and energy prices, fell 0.1 percent.
The Ministry of Economy, Trade and Industry said industrial output rose 1.6 percent from a year earlier and 3.2 percent from the month before, in a sign the recovery is taking hold. It forecasts further expansion this month and next month.
“Income and other data show quite positive signs of recovery,” RBS Japan Securities economist Junko Nishioka said.
The government has boosted spending and pushed for ultra-loose monetary policies aimed at generating inflation. It says that will help perk up demand and, in response, investment and employment, ending years of stagnation.
However, economists say that without matching increases in wages, rising prices and planned tax hikes could actually weaken the consumer demand that accounts for the bulk of business activity, undermining any economic rebound.
Average household spending fell 1.4 percent last month from a year earlier, despite slight improvements in income and the jobless rate, which fell to 3.8 percent from 3.9 percent the month before.
Retail sales fell 0.3 percent last month from a year earlier for the first decline in three months. Sales of clothing and other items sagged, while food sales rose.
The government attributed at least some of the limpness of demand to hot weather.
However, with prices rising, many consumers already are feeling a pinch, Capital Economics said in a commentary.
“Perhaps the biggest threat to consumer spending is the rise in inflation,” it said, adding that bustling sales earlier in the summer were probably helped by bonus payments and overtime in June.
“Households are probably well aware that once the summer bonus season is over, wages will likely continue shrinking, depressing their purchasing power,” it said.
Still, the overall positive tone of last month’s data will likely bolster support for pushing ahead with a sales tax planned for April 1 next year. A decision on that plan is due within the next month.
The anticipated 3 percentage point increase in the nationwide sales tax to 8 percent will undoubtedly be a blow, Ishioka said, but she expects it to be short-lived given the currently favorable trends.
“People’s sentiment is improving. I think the fundamental conditions are OK,” she said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day