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
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.
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%.
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,
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
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.
Sources: Ministry of Economy, Trade and Industry and
% change y-o-y
Sources: IHS Markit, Nikkei and Haver Analytics.