Tradeline Financials - Japanese Economic Update - Week 26, 2014
The Nikkei closed out the week over 1% down after a range of economic data was released showing a mixed bag of results which left a lot to interpretation.
Expected to be weaker after a poor day in the US markets the Nikkei 225 progressively dipped throughout trading to close 213.49 points off its open.
This seemed surprising as the economic data presented today painted a much better picture of the world's third largest economy. Of significance was the 3.4% increase seen in consumer prices for May, its fastest increase in 32 years and followed on from an increase of 3.2% in April. This can be firmly placed on the sales tax increase implemented at the beginning of April which saw taxes increase from 5% to 8%, its first increase in 17 years and will increase again in October 2015 to 10%. The increase was one way Prime Minister Shinzo Abe was looking to battle the decades of deflation his country has seen as their aging population puts massive strain on the countries financial resources. Social Welfare has made such an impact that public debt is now 230% of Japan's GDP.
Consumer spending has drastically reduced since the sales tax increase which was to be expected however the rate at which it has reduced even beat most analysts forecasts. With a 8% reduction in May after a 4.6% reduction in April over 2013's figures it is obvious that Japanese consumers are waiting to see how much the sales tax increase will start to affect daily prices. As we have seen, CPI is up the last two months, yet the reduction in consumer spending has been far greater leaving us to suggest that the Japanese consumers are saving over spending at this time.
It isn't all bad news however. This month saw the jobless rate reach its lowest in 16 years. With an unemployment rate of just 3.5%, last seen in 1997 and an availability of jobs not seen as high since 1992 it is fair to say that although the demographic of the country is driving its economy in some ways, the opportunities are most definitely there and should the government continue to apply small measures to combat deflation, it will pull its economy back into line.
Major Global Indices as of 27th June 2014:
Nikkei - 15,095.00 -1.39%
Hang Seng - 23,201.80 +0.02%
FTSE100 - 6,735.12 +0.02%
DAX - 9,804.90 _0.64%
S&P 500 - 1,957.22 -0.12%
Dow Jones - 16,846.13 -0.13%
For more information on the services provided by Tradeline Financials advisors please visit our website at www.tradeline-
DISCLAIMER The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Tradeline Financials. All market data within this release is for your general information and enjoys indicative status only. Tradeline Financials does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.