Japan's Wholesale Inflation Slows for Third Month

Oct 12, 2007 - Japan's wholesale inflation slowed for a third month in September as financial-market turmoil triggered by a U.S. housing slump damped commodity prices and strengthened the yen, making imported materials cheaper.

The producer price index climbed 1.7 percent from a year earlier, extending 3 1/2 years of gains and following a revised 2 percent advance in August, the Bank of Japan said in Tokyo today. The median forecast of 34 economists surveyed by Bloomberg News was for a 1.9 percent increase.

Economists say it's unlikely that producer prices will keep slowing, given that the Japanese currency has since weakened and commodities have rebounded. Yamazaki Baking Co. Japan's largest bread and pastry maker, this week said it would raise prices for the first time in 17 years to cope with higher wheat costs.

"Japan's corporate goods prices will stay on a moderate upward trend," said Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo and a former central bank official. "As long as the global economy keeps expanding at the current solid pace, demand for energy and raw materials will stay strong."

The yen traded at 117.20 per dollar at 3:11 p.m. in Tokyo from 117.39 before the report was published. Japan's currency has weakened 2.5 percent against the dollar in the past month.

The Japanese economy is ``steadily advancing to the end of deflation,'' Economic and Fiscal Policy Minister Hiroko Ota said.

Food Prices

The government is closely monitoring the effect of recent increases of food prices on households, Ota told reporters. Policy makers are also watching whether small companies can pass rising costs on to clients and protect their profits, she said.

Marudai Food Co. said this week that it will raise prices of its ham and sausages, following rivals Nippon Meat Packers Inc. and Itoham Foods Inc.

Instant-noodle makers Nissin Food Products Co., House Foods Corp. and Sanyo Foods Co. announced price increases last quarter. Global wheat prices have almost doubled in the past six months as adverse weather lowered harvests. The government raised the price of the grain it sells to millers by 10 percent this month.

Wholesale price gains have yet to translate into consumer inflation in the world's second-largest economy.

Core consumer prices, which exclude fresh food, declined 0.1 percent in August from a year earlier. They haven't risen this year. Even so, the wave of price increases for food and household goods is influencing consumers' expectations of inflation, Bank of Japan Governor Toshihiko Fukui said.

Inflation Perceptions

"Though the consumer price index hasn't moved an inch, consumers' inflation perceptions may be changing," Fukui told reporters yesterday. "Their perception is an important factor, and we need to make a policy judgment by reflecting it."

Core consumer prices will increase 'before long' and inflationary pressure 'is mounting gradually,' he said.

The Bank of Japan yesterday kept the key overnight lending rate at 0.5 percent, the lowest in the industrialized world, as policy makers sought more time to assess the effect of the U.S. subprime-mortgage crisis on global economic growth.

Eleven of 31 economists surveyed by Bloomberg News forecast a rate increase by the end of the year.

The central bank's overseas commodity index of 16 raw materials, which includes crude oil, nonferrous metal and steel, soared 23.2 percent in September from a year earlier, the fastest gain in almost a year, according to the central bank.

Small Companies

Small companies, which have less price-setting power than large companies, are struggling to pass energy and material costs to clients and that's eroding their sentiment and profits.

Confidence at small manufacturers and service providers fell in September, according to bank's quarterly Tankan business survey. They estimated profits would drop this fiscal year, a reversal from the growth in income forecast three months earlier.

"Pass-through of costs is happening only among companies that have pricing power," said Yoshimasa Maruyama, a senior economist at BNP Paribas Securities in Tokyo.

Economy Minister Ota said the inability to raise prices may hurt small businesses and the Tankan indicated such concerns.

"Most important is that the economy keeps recovering, and that the recovery of corporate profits spreads to small companies and helps to raise wages," she said.

From a month earlier, Japan's producer prices fell 0.1 percent, the central bank said.

The central bank plans to reshuffle the producer-price index in December and release data using the revised method on Dec. 12, the bank said today.

The revision may lower the index, said Azusa Kato, an economist at BNP Paribas Securities Japan Ltd. in Tokyo.

Japan August nationwide core CPI falls 0.1%

Sep 28, 2007 - Japanese core consumer prices fell 0.1 per cent in August from a year earlier, marking the seventh straight month of annual declines and matching economists' consensus forecast, government data showed on Friday.

In the Tokyo area, the core consumer price index (CPI), which excludes volatile fresh food prices, fell 0.1 per cent in September compared with a year earlier, against the consensus forecast of a flat reading.

The government announces Tokyo area figures a month before the nationwide figures.

August jobless rate rise to 3.8%
Japan's seasonally adjusted unemployment rate rose to 3.8 per cent in August against a market consensus forecast of 3.6 per cent, government data showed.

The jobs-to-applicants ratio for August was 1.06, meaning 106 jobs were available per 100 applicants, below the market consensus forecast of 1.07.

Industrial output up 3.4%
Japan's industrial production rose 3.4 per cent in August from a month earlier, compared with a median market forecast for a 3.2 per cent rise.

Manufacturers' output, the core component of production, is expected to fall 0.8 per cent in September but rise 4.1 per cent in October, data from the Ministry of Economy, Trade and Industry showed.

The ministry said industrial output is on a moderate rising trend, upgrading its assessment for the first time in four months.

August retail sales rise 0.5%
Japanese retail sales rose 0.5 per cent in August from a year earlier, compared with economists' median forecast for a 0.1 per cent increase.

It was the first time in three months that retail sales increased from the same month a year ago, signalling a moderate recovery in consumer spending.

Compared with July, retail sales were up 3.9 per cent on a seasonally adjusted basis, the Ministry of Economy, Trade and Industry said.

All households spending up 1.6%
Overall household spending in Japan rose 1.6 per cent in August from a year earlier in price-adjusted real terms, against a median market forecast of a 1.2 per cent rise.

Compared with July on a seasonally adjusted basis, spending rose 0.4 per cent.

The average household spent 296,035 yen (US$2,561) in August, according to the data released by the Ministry of Internal Affairs and Communications.

Spending by wage earners' households rose 3.6 per cent in August from the same month a year ago, the data showed.

Japan's Industrial Production Rebounds In August

Sep 28, 2007 - Japan's August industrial output increased for the first time in two months, driven by higher production of transport equipment, electronic parts and devices and general machinery, the Ministry of Economy, Trade and Industry said Friday.

The ministry upgraded its assessment of industrial output saying, " Industrial Production is on a moderately upward trend." In July, the ministry said that Production appeared to be flat.

The industrial production index increased 3.4% in August from the previous month compared to a decline of 0.4% in July. This marked the highest growth in eight months.

On an annual basis, industrial output rose 4.3% in August, after climbing 3.2% in the previous month. Commodities that mainly contributed to the increase are large passenger cars, drive, transmission and control parts and small passenger cars.

Based on the survey, the Ministry forecasted that the production would decrease 0.8% in September and increase 4.1% in October. In the August survey, production was projected to fall 2.5% in September.

Transport equipment, information and communication electronics equipment, and general machinery industries are expected drag output in September. However, these industries are projected do better in October, the Ministry said.

The shipment index rose 4.3% from the previous month in August compared to a drop of 1.2% in the prior month. The monthly fall in July remained Unrevised. The shipping activity grew for the first time in two months. The index climbed 4.3% annually compared to the 3.1% growth in the prior month.

The industries that mainly contributed to the increase in shipping activity are Transport equipment, Electronic parts & devices, and Electrical machinery.

The inventory index increased 0.3% on a monthly basis in August compared to a fall of 0.1% in the previous month. The inventory index recorded an increase for the first time in four months. The index rose 2.2% in August compared to a increase of 2.4% in the previous month.

The inventory ratio declined 1.0% in August from the previous month, following a decline of 1.4% in the previous month. Annually, the ratio increased 0.9% in August, after a fall of 0.6% in July.

Japan August Consumer Price Index -0.2 YOY

Sep 28, 2007 - Japan's consumer price index for August 2007 was 100.6, a decline of 0.2 percent from the year before but a gain of 0.5 percent from the previous month.

The consumer price index for the Ku-are of Tokyo for September of 2007 was 100.4, a drop of 0.2 percent from the previous year but a gain of 0.1 percent from the previous month.

Among the top ten major national groups in the index, furniture and household utensils fell 1.8 percent for the year and 0.3 percent since July, Reading and recreation was down 1.2 percent for the year but up 1.6 percent from the month before.

Clothes and Footwear and Medical Care sectors posted the largest year-to-year gains, each at 0.8 percent for the year, although clothes and footwear was down 1.7 percent from July.

The food sector fell 0.4 percent for the year, but posted a 1.0 percent gain for July.

Japan Aug trade surplus 743.2 bln yen, +287.6 pct y/y

Sep 26, 2007 - Japan's trade surplus rose 287.6 percent in August from a year earlier to 743.2 billion yen ($6.47 billion), government data showed on Wednesday.

The figure compared with analysts' median forecast for a 26.6 percent rise in the surplus to 242.8 billion yen.

Exports rose 14.5 percent from a year earlier to 7.0301 trillion yen, compared with economists' median forecast for a 10.7 percent rise, data from the Ministry of Finance showed.

Imports rose 5.7 percent to 6.2869 trillion yen, against the market consensus for a 10.0 percent increase.

Exports to the United States increased 4.6 percent from a year earlier to 1.3897 trillion yen, while those to China increased 23.8 percent to 1.1256 trillion yen.

On a seasonally adjusted basis, the overall customs-cleared trade surplus increased 30.4 percent from the previous month to 1.1449 trillion yen, the data showed.

Japan's August CGPI Grows Slower, Current Account Surplus Narrows In July

Sep 12, 2007 - Japan's domestic corporate goods price index - CGPI rose 1.9% in August from last year, driven by higher raw material prices, the Bank of Japan said Wednesday. This marked the forty-second consecutive monthly increase. Nonetheless, these increases failed to push Japan's core consumer prices, which remained sluggish in the past seven months forcing the BoJ to delay the much awaited interest rate hike.

In the prior month, CGPI climbed a revised 2.2%, the report said. On a monthly basis, corporate good prices remained unchanged in August, following seven consecutive months of increases.

Economist expected the CGPI to gain 1.8% from last year and rise 0.1% from the prior month.

Prices of manufacturing products rose 1.9% in July from the previous year, while that of minerals and scraps& wastes climbed 4.0% and 28.4% respectively. Electrical power, gas & water prices rose 0.9% in contrast to prices of agriculture, forestry & fishery products, which eased 0.9% from a year ago.

Price increase was broad based across almost all manufacturing industry products. Iron & steel prices increased the most, rising 11.6%, while prices for electrical machinery & equipments and precision instruments slipped 2.0% and 0.3% respectively.

The report said that the export price index rose 1.2% in August, down from a revised 5.3% increase in the prior month. The import price index gained 4.2% compared to a revised 8.9% rise in July.

Prices of commodities categorized on the basis of demand and use rose 2.3% in August, down from a revised 3.4% in the previous month. Raw material prices climbed 4.2%, slower than the revised 8.3% jump in July. Prices of intermediate goods rose 3.2%, while finished goods prices inched up 0.3% from a year earlier.

BoJ in its semiannual outlook report released in April, reiterated that the CGPI is likely to continue its upward trend despite fluctuations in crude oil price and exchange rates.

However, the continued growth in the CGPI at slower rate compared to prior month, will unlikely give enough room for the central bank's policy board for a rate hike when it meets on September 18 -19 for its next policy meeting. The recent weak economic data, prominently the revised second quarter GDP number, which showed that the Japanese economy shrank 1.2% from year ago, almost rule out the chances of a rate revision this time, analysts say.

There are also concerns about how the global financial market volatility that was sparked off by the U.S. subprime loan crisis will impact the Japanese external demand and the economy at large in the near term.

Current Account Surplus Narrows

The Ministry of Finance, in a preliminary report said Wednesday, that Japan's current account surplus grew 4.5% to 1855.9 billion yen in July from a year earlier. Analysts were looking for a current account surplus of 1810.0 billion yen for July. In the prior month, the current account surplus widened 48.4% from a year ago.

The growth was due to a solid income account, which showed a 24.6% increase in surplus, partially offsetting the fall in trade surplus.

The overall trade surplus fell 29.6% to 458.8 billion yen in July, impacted by a 17.6% decrease in trade surplus in goods to 784.3 billion yen. Services account showed a net deficit of 325.5 billion yen.

Exports rose 11.1% to 6,688.8 billion yen, while imports advanced 16.6% to 5,904.5 billion yen. This compared to a 16.1% increase in exports and 9.2% growth in imports in the prior month.

Income account showed a surplus of 1517.0 billion yen in July, compared to 456.8 billion yen in June. Income from overseas debt rose to 1173.1 billion yen, while equity income amounted to 202.7 billion yen.

Current transfers showed a net deficit of 119.9 billion yen, compared to the prior month's deficit of 83.8 billion yen.

On a seasonally adjusted basis, current account surplus fell 14.3% to 1753.9 billion yen in July from the prior month, when it slipped 8.1%. The result fell short of the expected target of 1900.0 billion yen for July. Trade surplus of goods and services fell 13.7% to 606.3 billion yen, while income surplus narrowed to 1270.7 billion yen from a surplus of 1439.5 billion yen in the prior month.

Japan's Economy Contracts a More-Than-Expected 1.2%

Sep 10, 2007 - Japan's economy contracted at almost twice the pace forecast by analysts in the second quarter, reinforcing speculation the central bank will leave interest rates unchanged this year.

The economy shrank at a 1.2 percent annual rate in the three months ended June 30 as business spending slumped, the Cabinet Office said in Tokyo today. The government initially forecast a 0.5 percent expansion.

Bond yields fell to the lowest level since February last year on expectations the central bank will keep its overnight lending rate at 0.5 percent to prevent the economy from falling into recession. Any rebound in growth depends on the severity of the housing slowdown in the U.S., the biggest export market for Japanese companies including Toyota Motor Corp. and Sony Corp.

"A move by the Bank of Japan is out of the question," said Takehiro Sato, chief economist at Morgan Stanley Securities Japan Ltd. in Tokyo. "A cloud is hanging over the domestic and global economy."

The median forecast of 31 economists surveyed by Bloomberg News was for the economy to recede at a 0.7 percent annual pace.

The yield on the benchmark 10-year bond slid 8 basis points to 1.51 percent at 3:55 p.m. in Tokyo. The Nikkei 225 stock average tumbled 2.2 percent. The yen traded at 113.26 per dollar from 113 before the report was published.

Quarterly Drop

Japan's economy contracted 0.3 percent from the previous quarter. The Cabinet Office revised the data to show that the last time the economy shrank was in the third quarter of 2006, when it fell 0.1 percent from the previous three months.

Toyota, Japan's largest automaker, saw its U.S. sales drop for the second straight month in August, the first back-to-back decline in 4 1/2 years. Weaker demand in California, Toyota's biggest U.S. market and one of the states where housing is slumping, was partially to blame. The company's shares fell 2.4 percent today.

Sony Corp. shares dropped 6 percent today, taking their decline the past two months to 18 percent. The world's biggest producer of game consoles makes about 70 percent of its sales outside Japan.

The nation's business investment fell 1.2 percent in the second quarter, reflecting a report last week that showed spending by Japanese companies unexpectedly slid in the period. Public investment was revised to a 2.6 percent drop from the previous estimate of a 2.1 percent decline.

Consumer Spending

Gains in household spending in the quarter helped counter the slump in corporate outlays. Spending by consumers, which makes up half the economy, was revised to show a 0.3 percent increase, from an initial estimate of a 0.4 percent gain.

Business and consumer spending were the main drivers of growth last year, reducing the economy's reliance on exports.

Investors now see a zero percent chance that the bank will raise the benchmark rate from 0.5 percent when policy makers conclude their next meeting on Sept. 19, according to Credit Suisse Group calculations based on interest-rate swaps.

Expectations of a rate increase have fallen since losses on U.S. subprime mortgages caused corporate credit costs to jump, global stocks to plummet and the yen to surge.

The Federal Reserve will probably cut its key rate to 5 percent from 5.25 percent when it meets Sept. 18, according to the median forecast of 111 economists surveyed by Bloomberg News. Those expectations rose last week after a report showed the U.S. economy lost jobs in August for the first time in four years.

'The Bottom Line'

"The bottom line is that there won't be any rate hikes in Japan as long as the U.S. economy keeps decelerating," said Yoshimasa Maruyama, a senior economist at BNP Paribas Securities Japan Ltd. in Tokyo.

Since July, Japan's economic growth has shown signs of losing momentum. The trade surplus shrank for the first time this year on weak export growth and industrial production fell. Household spending, a measure of consumer activity, had the biggest drop since December.

There are some indications the economy will accelerate again, albeit at a slower pace than some economists had been forecasting.

"There are enough warning signs in the latest business and consumer surveys to suggest that the subsequent rebound may be rather weaker than usual," Julian Jessop, an economist at Capital Economics in London, said in a note.

Manufacturing Production

Manufacturers expect industrial production to improve after July's drop. They forecast then that output would rise 6.8 percent in August and 2.5 percent in September.

Japan's broadest indicator of the outlook for growth was 70 percent in July. A reading of 50 or more indicates the economy may expand in three to six months.

"The recent rebound in the index is reassuring," said Jessop.

A report tomorrow is expected to show that machinery orders, which point to capital spending in three to six months, rose 5.3 percent in July, according to the median forecast of 21 economists surveyed by Bloomberg News.

"There is no change in Japan's economic trend overall," said Finance Minister Fukushiro Nukaga in Tokyo today. "We expect that the economy will continue its long-lasting growth."

Even after the contraction, Japan's economy expanded at a 2.5 percent annual pace in the first two quarters, the government said, higher than the economy's potential growth rate of 2 percent.

Japan forex reserves rise to record 932.16 billion dollars in August

Sep 7, 2007 - Japan's foreign exchange reserves surged to a new record of 932.157 billion US dollars at the end of August, up from the previous all-time high of 923.718 billion dollars in July, buoyed by rises in prices of US Treasuries, the Ministry of Finance said Friday.

The reserves at the end of August included $785.602 billion in securities and $125.265 billion in deposits. The rest includes IMF reserve positions, special drawing rights and gold.

Treasury prices were supported by strong interest from risk-averse investors fleeing the turbulence on global financial markets, stemming from the US subprime loan problem.

As a result, the yield on the 10-year note stood at 4.533 percent at the end of August, down from 4.743 percent at the end of July.

Bond prices move inversely to yields.

An official at the finance ministry said the increase in Japan's reserves was also because of higher coupon income from US bonds.

At the same time, the the weakening of the euro against the dollar deflated the dollar value of euro-denominated assets, negatively affecting the value of Japan's foreign exchange reserves, an official said.

The euro fell to 1.3630 dollars at the end of August from 1.3683 dollars in the previous month, according to data from the ministry.

Japan's forex reserves remain the second largest in the world, next to China, whose holdings reached 1.33 trillion dollars at the end of June, according to the latest available data from China's central bank.

Foreign exchange reserves consist of securities and deposits denominated in foreign currencies, plus International Monetary Fund reserves, IMF special drawing rights (SDRs) and gold.

At the end of August, Japan's foreign currency reserves totaled 910.867 billion dollars, IMF reserves stood at 1.490 billion dollars, SDRs at 2.917 billion dollars, gold at 16.533 billion dollars, and other foreign currency assets at 350 million dollars.

Japan's reserves are closely watched for evidence of how the country is managing its foreign currency holdings. Its actions are seen having a significant impact on currency exchange rates and global bond markets, particularly the US government bond market.

The biggest changes in Japan's forex reserves usually occur when authorities intervene in the currency market to prevent the yen from appreciating too much. Monetary authorities have not intervened since mid-March 2004.

The government does not disclose the currency breakdown of the external reserves. But historical data on Japan's currency intervention, which has mostly taken the form of dollar buying, suggests most of Tokyo's hefty reserves are in dollars.

Unlike some other countries which have been diversifying their forex reserves recently, Japan has been reluctant to significantly change the make-up of its reserves, fearing such action could disturb currency markets.

Top government spokesman Kaoru Yosano said on Friday that Japan needs to carefully manage its vast foreign reserves while paying heed to the stability of currency markets.

(1 US dollar = 115.37 yen)

Japan July jobless rate 3.6 pct

Aug 31, 2007 - Japan's seasonally adjusted unemployment rate fell to a nine-year low of 3.6 percent in July,against a market consensus forecast of 3.7 percent, government data showed on Friday.

It matched a low of 3.6 percent in February 1998.

Japan manufacturers' PMI up amid subprime worries

Aug 31, 2007 - Manufacturing activity in Japan picked up slightly in August, helped partly by firm exports, a survey showed on Friday, but the sector was still fragile amid worries about fall-out from U.S. credit problems.

The NTC Research/Nomura/JMMA Purchasing Managers Index (PMI), which gives an early snapshot of the health of manufacturing, edged up to a seasonally adjusted 49.6 in August, recovering from a four-year low of 49.0 in July -- but it was still a negative result for the second month in a row.

A reading above 50 suggests expansion, while a figure below points to a contraction.

Japan July industrial output -0.4 pct mth/mth

Aug 31, 2007 - Japan's industrial production fell0.4 percent in July from a month earlier, compared with a medianmarket forecast for a 0.5 percent fall.

Manufacturers' output -- the core component of production -- is expected to rise 6.8 percent in August but fall 2.5 percent in September, data from the Ministry of Economy, Trade and Industry showed on Friday.

The ministry said industrial output is in a flat trend, keeping the same assessment for the third straight month.

Japan July nationwide core CPI -0.1 pct yr/yr

Aug 31, 2007 - Japanese core consumer prices fell 0.1 percent in July from a year earlier, in line with economists' consensus forecast, government data showed on Friday.

In the Tokyo area, the core consumer price index (CPI), which excludes volatile fresh food prices, were flat in August compared with a year earlier, against the consensus forecast of a 0.1 percent decline.

Japan July all households spending -0.1 pct yr/yr

Aug 31, 2007 - Overall household spending in Japan fell 0.1 percent in July from a year earlier in price-adjusted real terms, against a median market forecast of a 0.2 percent rise.

Compared with June on a seasonally adjusted basis, spending fell 1.2 percent, government data showed on Friday.

Japan July retail sales -2.2 pct yr/yr

Aug 30, 2007 - Japanese retail sales fell 2.2 percent in July from a year earlier, government data showed on Thursday, compared with economists' median forecast for a 0.8 percent decrease.

Compared with June, retail sales were down 2.4 percent on a seasonally adjusted basis, the Ministry of Economy, Trade and Industry said.

Japan July trade surplus 671 bln yen, -21pct y/y

Aug 23, 2007 - Japan's trade surplus fell for the first time in nine months in July, prompting concerns about the outlook for the country's exports amid worries over a slowdown in the U.S. economy due to rising U.S. mortgage defaults.

But the data did little to alter market views that the Bank of Japan (BOJ) will keep interest rates on hold at a two-day policy meeting starting on Wednesday in view of a global credit squeeze that has sparked financial market turmoil.

Exports rose 11.7 percent from a year earlier to 7.0627 trillion yen ($61.40 billion), below economists' median forecast for a 13.0 percent rise, led by shipments of automobiles and steel products, customs-cleared data from the Ministry of Finance showed on Wednesday.

Japan's overall imports, on the other hand, rose 16.9 percent to 6.3915 trillion yen, against the market consensus for a 15.6 percent increase, due to rising crude oil and raw materials prices as well as the yen's weakness.

As a result, Japan's trade surplus fell 21.1 percent in July from a year earlier to 671.2 billion yen, against economists' median forecast for a surplus of 764.9 billion yen, or a year-on-year fall of 10.1 percent.

Exports to the United States, Japan's largest export destination, rose 1.3 percent from a year earlier to 1.4420 trillion yen, mainly on an increase in shipments of organic compounds.

U.S.-bound exports had fallen in April for the first time in more than two-years but showed signs of recovery in the following months, while solid demand for Japanese goods in Asia and Europe has cushioned a slowdown in U.S. bound shipments.

Exports to Asia climbed 13.8 percent from a year earlier to 3.4236 trillion yen, rising for the 65th month in a row, and those to China increased 20.6 percent to 1.1018 trillion yen, led by shipments of electronic parts.

EU-bound exports rose 13.1 percent to 991.1 billion yen, up for the 21st straight month, led by shipments of automobiles.

On a seasonally adjusted basis, the overall customs-cleared trade surplus increased 0.1 percent from the previous month to 822.6 billion yen, the data showed.

Exports have been a key driver of growth in the world's second-largest economy, which is enjoying its longest growth cycle of the postwar period, albeit at a slower pace than in previous booms, on the back of robust corporate spending.

Japan's economic growth slowed to an annualised rate of 0.5 percent in April-June from 3.2 percent logged in the previous quarter, due in part to sluggish export gains.

The BOJ has left monetary policy unchanged since raising the key policy rate to a decade-high 0.50 percent from 0.25 percent in February, which was the first rate hike since July last year.

Japan economic growth slows in April-June

Aug 13, 2007 - Japan's economy grew 0.1 percent in April-June, government data showed on Monday, slightly short of market expectations for a 0.2 percent increase.

It was the 10th straight quarter of expansion and translated into an annualised increase of 0.5 percent, against a median market forecast for a 0.9 percent increase.

In January-March, the economy grew 0.8 percent, for a revised annualised rise of 3.2 percent.

Following are some key points on the preliminary data, based on a briefing by a Cabinet Office official and comments by Economics Minister Hiroko Ota at a briefing later:

- Slower growth in the second quarter was mainly due to a slower rise in consumption and a flat reading for external demand, caused by slower exports to the United States.

- Private consumption, which accounts for some 55 percent of GDP, rose 0.4 percent in real terms in the quarter, thanks to rises in clothing, electricity charges and household appliances such as air conditioners, following a 0.8 percent rise in January-March.

- Slower consumption growth compared with the previous quarter was due to tame growth in incomes. Consumption of jewellery and sports and recreation services also fell, the official said.

- Corporate capital spending, a main engine of growth, rose 1.2 percent, marking the sixth consecutive quarter of increase, helped by investment in plant engineering, software and electrical appliances such as car navigator systems.

- The GDP deflator fell 0.3 percent from the same quarter a year earlier but the domestic demand deflator rose 0.2 percent.

- The government made a minor revision in the way it compiles preliminary gross domestic product from the April-June data. That included a change in the calculation method for inventory contributions to GDP which pushed down the overall GDP figure by 0.1 percentage point.

Japan June current account surplus +48.4 pct yr/yr

Aug 13, 2007 - Japan's current account surplus rose 48.4 percent in June from the same month a year earlier to 1.5203 trillion yen ($12.84 billion), government data showed on Monday.

Forecasts in a Reuters poll had centred on a year-on-year rise of 57.0 percent to 1.6090 trillion yen. The trade surplus rose 56.8 percent to 1.3524 trillion yen, with exports rising 16.1 percent and imports up 9.2 percent. The income surplus, or gains made on overseas investments, fell 2.6 percent from the same month a year earlier.

For the January-June period, the current account rose 31.1 percent to a record 12.47 trillion yen (US$105.43 billion; euro77.24 billion) from a year earlier, expanding for the fourth straight term, the ministry said.

The current account measures trade in goods, services, tourism and investment. It is calculated by determining the difference between Japan's income from foreign sources against payments on foreign obligations and excludes net capital investment.

In May, the current account rose 31.1 percent from a year earlier.

Japan July wholesale prices +2.1 pct y/y, +0.6 pct m/m

Aug 10, 2007 - Japanese wholesale prices rose 2.1 percent in July from a year earlier, Bank of Japan data showed on Friday, matching economists' median forecast.

Compared with a month earlier, the corporate goods price index (CGPI), which tracks trends in wholesale prices of goods, rose 0.6 percent in July, compared with the market's consensus forecast of a 0.6 percent increase.

Japan revised June industrial output +1.3 pct m/m

Aug 10, 2007 - Japan's industrial production rose 1.3 percent in June from a month earlier on a seasonally adjusted basis, revised government data showed on Friday.

Preliminary data had shown a rise of 1.2 percent.

The capacity utilisation index rose 0.8 percent from a month earlier.

Japan June core machinery orders -10.4 pct m/m

Aug 8, 2007 - Japan's core private-sector machinery orders, a key gauge of corporate capital spending, fell 10.4 percent in June from the previous month, government data
showed on Wednesday.

That compared with economists' consensus forecast for a 1.9 percent decline, following a 5.9 percent rise in May, the Cabinet Office said.

Compared with a year earlier, core orders, which exclude those for ships and machinery at electric power firms, fell 17.9 percent, against a median forecast of a 9.9 percent drop.

Manufacturers surveyed by the Cabinet Office forecast that core orders, a highly volatile series regarded as an indicator of capital spending in the coming six to nine months, will show a 3.7 percent rise in July-September from the previous quarter.

In April-June, the orders decreased 2.4 percent.