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World Economy


OPEC Monthly Oil Market Report – November 2017


remained at 0.7% y-o-y in September, the same level as in the past month. While wage growth in

August remained low, it rose to 1.2% y-o-y, compared with 0.7% y-o-y in July. This was the largest increase

in more than a year. Thereby, tight labour markets are seeming to slowly support wage growth, while the

current level is still far below the government’s aim of a 3% rise. Core inflation (which excludes food and

energy) remained extremely low in September at 0.0% y-o-y, the same level as in August. However this

comes after five months of declining core-inflation. The

unemployment rate

remained at the extremely low

level of 2.8% for a fourth month in a row, a situation that may also lead to further rising wages and

consequently accelerating inflation in the near-term, particularly as the government seems now willing to

offer further support via fiscal measures.

Monetary stimulus

is continuing. The BoJ kept short-term interest rates at minus 0.1%, a cap on 10-year

bond yields at “around zero” and will carry on buying assets at a pace of ¥80tn a year. Moreover, the BoJ’s

policy board lowered its forecast for inflation, excluding fresh food, in the year to March 2018 from 1.1% to

0.8%. For the year to March 2019, it trimmed its forecast from 1.5% to 1.4%.

Japanese exports

were a considerable support for the economy in September, as external trade rose by

14.1% y-o-y, following a significant rise of 18.1% y-o-y in August. This is higher than the July number of

13.3% y-o-y and confirms a healthy trend. A strong increase in exports was seen in all main products, but

mainly supported by the group of industrial goods and capital equipment, as in the past months. Additionally,

industrial production

continued to expand significantly, albeit at a slightly lower level in September, as it

rose by 3.5% y-o-y. This is the fourteenth consecutive month of rising production and compares to 5.0%

y-o-y in August and 4.8% y-o-y in July. This continues to be supported by a strong trend in manufacturing,

which climbed by 4.0% y-o-y in September, compared with 5.3% y-o-y in August. Manufacturing orders point

at a continuing solid trend, as orders rose by 9.9% y-o-y in September, This, however, compares to a

significantly higher level of 21.7% y-o-y in August, both levels forming a solid cushion for a positive trend in

near-term capex spending.


domestic retail demand

continued the positive trend as the level of retail sales recovered to

2.2% y-o-y growth in September, compared with lower numbers of 1.8% y-o-y in both August and July. This

brings the 3Q17 retails sales growth figure to 2.0% y-o-y, compared with only a slightly higher momentum of

2.5% in 2Q17. The trend is also forecast to continue at around this level for the remainder of the year and

into 2018, as consumer confidence continues its solid trend amid labour market tightness and the

expectation of wage increases.

Graph 3 - 3: Japanese retail trade

Graph 3 - 4: Japanese PMIs

The latest


numbers confirm a positive trend in both the manufacturing and the services sector. The

manufacturing PMI remained almost unchanged at 52.8 in October, after 52.9 in September, both clearly

above the growth-indicating level of 50. The services sector PMI posted strong growth in October, moving up

to 53.4, compared to 51.0 in the previous month. This also confirms the latest BoJ’s 4Q17 Tankan survey

index, a widely-watched index for business activity and expectations in Japan, which had reached a new

multi-year high at a level of 19, the highest level in 10 years.









Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

Sources: Ministry of Economy, Trade and Industry and

Haver Analytics.

% change y-o-y









Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

Oct 17


Sources: IHS Markit, Nikkei and Haver Analytics.

Services PMI

Manufacturing PMI