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Japan's industrial production falls 2.5%; inflation up 3.2%

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And still people think that Abenomics will save the country...

2 ( +5 / -3 )

hope springs eternal...

-2 ( +1 / -3 )

“Industrial production appears to be flat,” the ministry of economy, trade and industry said in a statement,

Gee, ya think? And the inflation number is driven by higher energy prices. Doesn't look like Abenomics is quite the unqualified expense Abe and the head of the BOJ would like to make everyone believe.

1 ( +4 / -3 )

@SauloJpn,

To be fair, Abenomics isn't completely implemented yet so we really can't say for sure. If the reforms, which will be finalized in June, prove a failure then Abenomics will have failed.

This was to be expected, though. The consumption tax was always going to have this effect. We'll have to wait and see. Japanese consumers will start buying stuff again, and Abe's reforms might still bear fruit.

3 ( +7 / -4 )

So, here comes the runaway inflation folks! Manufacturing is down, consumer spending is, taxes are up and shops will have to raise their prices to compensate for the loss in turnover. There is the downhill spiral. Prices will continue to go up as people spend less and the higher the price get the less people will spend. Abenomics is economic doom!

0 ( +5 / -5 )

To be fair, Abenomics isn't completely implemented yet so we really can't say for sure. If the reforms, which will be finalized in June, prove a failure then Abenomics will have failed.

MGigante -- fair enough. But exactly what are these amazing reforms that are going to pull Japan out of its funk? I have not heard anything other than some of the usual lip-service/platitudes.

2 ( +5 / -3 )

Yen amount appears nowhere in this article...meaning serious downturn in economy due to forced inflation and consumption tax hike.

2 ( +4 / -2 )

Corporate tax will be part of it I guess, but I worry that it'll be too much talk about future plans and no near term action.

I hope Abe comes through though...

1 ( +2 / -1 )

GDP is, oddly enough, actually up. But I don't suspect Takeshi Q. Public will see much benefit. Higher inflation, higher taxes and falling production is going to mean more middle class strain.

It's time for some labor reform in Japan. Base wages have been absurdly low for too long, and the unpaid overtime scam needs to end. Cronyism causes most of Japan's economic problems..

1 ( +3 / -2 )

MGinate: Japanese consumers will start buying stuff again, and Abe's reforms might still bear fruit.

Consumers will learn to squeeze in. They will find innovative way to be more economical, will drink only one beer instead of two while thinking about those good old days)

1 ( +4 / -3 )

Sorry guys but I think you're being overly-optimistic. The problem is that the money is all in the hands of the stiff-lipped oyaji-san in charge of the corporations. The economic slowdown here is a result of an aging/shrinking Japan, lack of corporate investment and a deteriorating quality of life.

0 ( +2 / -2 )

Unless Abe is willing to take on the powerful bureaucrats he will not succeed. A lot of Japan's tax revenues are wasted by corporations whose only function is to provide employment for retired bureaucrats. These people go from company to company often receiving 3 or 4 retirement packages. They have high paying salaries and do very little if any work in fact in some cases they don' come to work. Also too many career politicians who spend most of their time running for office. There are too many diet members with bloated staffs and expense accounts all at the taxpayers expense. Stop all the waste of tax revenues as a first priority.

5 ( +5 / -0 )

Stop waste of tax revenues should be a priority, but the government is spending twice as much as tax revenue each year, anyway.

They need more tax revenue, less spending, or most probably some combination of both. More tax revenue might be obtained if the government would only adopt a free market, capitalist approach. Weighing the economy down with excessive regulations doesn't appear to have helped.

1 ( +2 / -1 )

Not sure why food prices are excluded. Just because something is "volatile" doesn't mean that it should be ignored. There are ways to calculate confidence intervals based on the variance. That is what every other discipline does.

3 ( +3 / -0 )

A separate survey by the ministry showed the jobless rate stood at 3.6% in April, unchanged from March and staying at the lowest rate in nearly seven years.

This is just more hogwash, and it's laughable that anyone actually believes this to be true!

1 ( +4 / -3 )

More disappointing news for investors. Abe is sitting on his hands when it comes to the reforms; anybody heard what they are planning? June is next week.

According to Kyle Bass and others, Japan is doomed no matter what it does, as more people are exiting the workforce than entering.

Abe got the order of arrows all wrong; should of fired the reform arrow first, then investors would of believed his reform story.

The tax hike was another mistake; it was too soon. Seems to have had little effet as well.

These xenophobic oyaji really got Abe on a leash. I think thats whats really in the way of everything.

1 ( +3 / -2 )

sengoku38, it's because food prices can go up and down because of temporary environmental factors. Not much the lords of the economy can do about that.

0 ( +1 / -1 )

sorry for the layman comment, but can someone explain that if the population is decreasing in general, why is it expected that production will rise? are they aiming for future supply or just hoping that fewer people will need more stuff?

1 ( +1 / -0 )

Accodrding Abenomic principles. consumer inflation should be tied up within 2% range. 3.2% is not encouraging sign. It can be risen further after adjusting with consumers price index. As Japanese industrial output has declined to the 2.5% means Japan is exporting less to oversea. Domestically Japan can not stimulate the growth driven consumption too.

It is true that no risks mean no growth. However artifcial growth which was stimulted by pumping of money is unsustainable too. Abe may has another special hidden arrow after sales tax hike. Low output, high inflation and low consumer confidence will make Japan as the land of the setting Sun.

2 ( +3 / -1 )

Meanwhile, consumer inflation rose 3.2% year-on-year in April.

Wait! This number does include rise in energy cost right? The last months, every time the government reported an increase in inflation, it was because of the energy cost.

Removing this part showed that inflation was in fact flat. I believe that this is also the case here and that the 3.2% are mainly driven by forced inflation produced by the government manipulation of the yen.

In other words, the government is saying non sense. It's making people struggling with increased energy cost by lowering the yen and it calls that then inflation.

1 ( +4 / -3 )

True inflation of the type we need is driven by consumer demand. When demand surpasses supply, inflation occurs.

Demand in Japan is not increasing. The inflation we are seeing is not due as much to consumer activity as it is to other factors like increased energy costs, government spending, taxation, etc. Given the current economic situation in Japan, increases in these areas will soon result in decreases in others, and the result will be "stagflation", or further deflation.

2 ( +4 / -2 )

gaijinheiwa: Don't worry, Abe is working to end the unpaid overtime scam by removing the requirement for companies to pay overtime. He claims this will allow companies to remunerate their employees according to how productive they are, but in fact it will lower incomes even further, depressing the economy. I am reminded of my time as a company employee when it was common for everyone to receive "below average" evaluations from the boss. Funnily enough he was also in favour of abolishing overtime payments.

It's not all bad news though: the company bosses who profit from this will be making increased donations to the LDP. Hooray.

4 ( +5 / -1 )

inflation+stagnant wages+millions of crappy jobs and the ever increasing working poor+the ever decreasing birthrate+the ever increasing aging society+nuclear fallout and contamination problems+ earthquakes+typhoons+tsunamis+yellow sand and its accompanying air pollution (now in its 4th week, BTW)+the threat of increasing Chinese belligerence+the poor relationship with Korea+increasing political nationalism= an even gloomier future for the Japan we know and love (p.s. did I miss anything?)

4 ( +4 / -0 )

zootmoney, yes you did. + the ever increasing Japanese government debt.

1 ( +1 / -0 )

Worst figures in 23 years.

2 ( +2 / -0 )

Abe is working to end the unpaid overtime scam by removing the requirement for companies to pay overtime.

Really? I didn't know that. I guess the country is on a steeper path to toilet that I thought....

-1 ( +1 / -2 )

"According to Kyle Bass and others, Japan is doomed no matter what it does,"

Kyle Bass for many years has made a number of predictions about Japan. Not a single one has come true. Investors who have taken his advice on Japan have lost their shirts. But you can go ahead and believe him, if you want. Maybe one day something he says might come true.

BTW, the hike in the consumption tax was sheer lunacy.

2 ( +4 / -2 )

Kyle Bass for many years has made a number of predictions about Japan. Not a single one has come true. Investors who have taken his advice on Japan have lost their shirts. But you can go ahead and believe him, if you want. Maybe one day something he says might come true.

The rules which apply to other countries do necessarily apply to Japan, at least not in the same way. If you look at the amount of debt Japan ia carryjng relative to the amount of assets and potential growth, bond yields and interest should be much higher, forcing a serious economic reaction. Such would be the case in America or Europe. But the Japanese instutional investors and government officials keep loaning and borrowing more and more to keep the economy from collapsing. Were this anywhere but Japan, one party or the other would have said "enough" by now.

It all reminds me of the last half of the second war. Japan knew there was no possibility of victory, and would not consider surrendering, regardless of the cost to the country and people. They fought on, knowing full well that continued fighting was pointless. The current leaders of Japan are well aware how serious the economic situation is, yet they are fighing on. The time of reckoning will come, but the later it comes, the more painful it will be.

2 ( +4 / -2 )

"Such would be the case in America...."

Wrong, America also has a record high fiscal debt and record low rates on its 10yr treasury. Europe, yes, because the weak Eurozone members have obligations in a currency they can't control.

"Were this anywhere but Japan, one party or the other would have said "enough" by now."

The Japanese did, when they elected the DJP a few years back. However its attempts to reign in spending, austerity, etc. made the economy worse and they got booted out..

0 ( +1 / -1 )

I think bass and others are hedging that the yen to hit 200. For some reason (sangetsu or lee explain) its not moving.

I also find it puzzeling how kuroda is changing his tune all the time. Last week it was tappering, now its extending.

2 ( +2 / -0 )

"For some reason (sangetsu or lee explain) its not moving."

Thanks for asking: 1) Bass and others don't have a clue about what they're talking about. 2) Because Japan, the US and others are generally happy with the range, and Japan, being a big mature, sophisticated economy with very hard currency, has a fairly good ability to keep the yen in that range. 3) Japan does not and will not have a debt crisis.

If you think response #1 was flippant, I suggest you read this:

http://www.businessinsider.com/japan-is-never-going-to-default-2012-5

-1 ( +0 / -1 )

@lee, Sorry, while I may not be an economist, I cannot buy into your rosy picture that Japan is doing everything right and others are mistaken.I read the link, and the thing that Bass haters keep repeating is that Japan is borrowing in its own currency, thus there will never be a default as that yen will always make it back to Japan. I think Bass is spot on. There are too many old people here, and its going to get allot worse. Nothing worth investing in because of this as too many workers are exiting the workforce. The b.s. reform will never take place either, because Japan is entrenched with xenophobic citizentry who dont want it. Abe had to fire the first feel good arrows first to soften his hard target of immigration and TPP. Im guessing as things get worse the yen will futher weaken and what Bass and others are predicting will come to pass but it may not be at the 200 mark.

2 ( +2 / -0 )

"....your rosy picture Japan is doing everything right and others are mistaken...."

The "others" have for years being making some specific predictions about Japan: about "hyper inflation," rising out of control bond yields, sovereign default, etc. But their critics say these developments can't really happen due to some basic economic truths.

Well, one side has been consistently wrong all these years, the other side consistently right. I'm on the side of the people who are right. I'm not "rosy," b/c I think the consumption tax hike is a massive mistake and could seriously slow down growth. Whatever happens, Japan like other developed countries is not going to grow much in the years ahead. But it's not going to collapse, either.

"I think Bass is spot on"

Then why has his short position on Japan been losing so much money for so long? It's called the "widowmaker" trade for a specific reason.

-2 ( +0 / -2 )

recent trade deficits, no natural resources, lack of any reform, aging demographics, closed minded made in Japan xenophobic solution to everything, 200+ % debt ratio with no way to pay it back- sorry, I must side with Bass.

He may be off on his weak yen 200 rate prediction, but its only a matter of time when the bug goes thump on the windscreen.

1 ( +1 / -0 )

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