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Economic Indicators

Japan’s core consumer prices rise at fastest pace in nearly 2 years

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Japan's core consumer prices rise at fastest pace in nearly 2 years
© Reuters. FILE PHOTO: Shoppers wearing protective face masks, following an outbreak of the coronavirus disease (COVID-19), are seen at a supermarket in Tokyo, Japan March 27, 2020. REUTERS/Issei Kato/File Photo GLOBAL BUSINESS WEEK AHEAD

By Takahiko Wada and Leika Kihara

TOKYO (Reuters) – Japan’s core consumer prices rose 0.5% in November from a year earlier, government data showed on Friday, marking the fastest pace of increase in nearly two years in a sign that the fallout from global commodity price inflation is broadening.

The increase, however, is unlikely to prompt the Bank of Japan (BOJ) to withdraw monetary stimulus any time soon, with inflation still distant from the central bank’s 2% target, analysts say.

The rise in the nationwide core consumer price index (CPI), which excludes volatile fresh food but includes oil costs, was bigger than a median market forecast for a 0.4% gain.

It marked the biggest increase since February 2020 and followed a 0.1% rise in October.

The so-called ‘core-core’ inflation index, which excludes both food and energy prices and is comparable to the core price index used in the United States, fell 0.6% in November from a year earlier.

Japan has not been immune to global commodity inflation, with wholesale prices rising a record 9.0% in November from a year earlier.

But core consumer inflation has hovered around zero, as firms remain cautious about passing on costs to consumers on concerns that households may hold back on spending.

The BOJ maintained an ultra-loose interest rate policy last week, and governor Haruhiko Kuroda stressed his readiness to keep rates low, even as other major central banks head for an exit from crisis-mode stimulus measures.

Japan has lagged other countries in staging a strong rebound from last year’s pandemic hit to the economy, with its gross domestic product shrinking an annualised 3.6% in July-September due to weak consumer spending and output hit by a spike in coronavirus infections and supply constraints.

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Economic Indicators

Australia boasts lowest unemployment since 1974 in nod for rate hikes

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© Reuters. FILE PHOTO – A worker pushes a trolley loaded with goods past a construction site in the central business district (CBD) of Sydney in Australia, March 15, 2018. REUTERS/David Gray

By Wayne Cole

SYDNEY (Reuters) -Australia’s unemployment rate stood at its lowest in almost 50 years in April as firms took on more full-time workers, a tightening in the labour market that will ratchet up pressure for further hikes in interest rates.

Figures from the Australian Bureau of Statistics on Thursday showed the jobless rate held at 3.9% in April, from a downwardly revised 3.9% in March, matching market forecasts.

Employment missed forecast with a rise of just 4,000, though that reflected a large 92,400 gain in full-time jobs being offset by a 88,400 drop in part-time work.

The fall in unemployment will be welcomed by Prime Minister Scott Morrison who has made jobs the clarion cry of his election campaign ahead of what is expected to be a close vote on Saturday.

It also strongly suggests the Reserve Bank of Australia (RBA) will lift interest rates again in June as it scrambles to contain a flare up of inflation to two-decade highs.

The central bank’s hike to 0.35% this month was the first since 2011 and markets are odds on it will move to 0.60% at its June 7 policy meeting.

So strong is the inflation tide globally that investors are wagering rates will rise to at least 2.5% by the end of the year, even if that threatens to cripple the economy.

So far, the labour market has withstood the pressure with employment rising by 381,500 in the past 12 months. Underemployment also fell to its lowest since 2008 and this rate has a close correlation to wages over time.

Wages, though, are still lagging, at least by the official measure which showed annual growth ticked up only slightly in the first quarter to 2.4%, half the pace of inflation.

However, surveys of businesses paint a different picture with more and more firms saying they are having to bump up pay to attract workers.

The RBA’s Board was particularly alarmed that firms were planning to pass on rising input and labour costs to customers, a sea change from the past decade when fierce competition kept prices restrained.

“The RBA has returned to a more forward-looking approach for labour costs amid much higher inflation, shifting on leading indications from liaison and the anticipated feed through of the still-tightening labour market to wages outcomes,” said Taylor Nugent, an economist at NAB.

He sees the central bank hiking by a quarter point at each of the next three monthly meetings.

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Economic Indicators

Australian jobless rate at lowest since 1974 in April

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© Reuters. FILE PHOTO – A worker pushes a trolley loaded with goods past a construction site in the central business district (CBD) of Sydney in Australia, March 15, 2018. REUTERS/David Gray

SYDNEY (Reuters) – Australia’s unemployment rate stood at its lowest in almost 50 years in April as firms took on more full-time workers, a tightening in the labour market that will ratchet up pressure for further hikes in interest rates.

Figures from the Australian Bureau of Statistics on Thursday showed the jobless rate held at 3.9% in April, from a downwardly revised 3.9% in March, matching market forecasts.

Employment missed forecast with a rise of just 4,000, though that reflected a large 92,400 gain in full-time jobs being offset by a 88,400 drop in part-time work.

The fall in unemployment will be welcomed by Prime Minister Scott Morrison who has made jobs the clarion cry of his election campaign ahead of what is expected to be a close vote on Saturday.

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Economic Indicators

Japan’s trade gap widens as import costs surge on supply pressures

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© Reuters. FILE PHOTO: A cargo ship and containers are seen at an industrial port in Tokyo, Japan, February 15, 2022. REUTERS/Kim Kyung-Hoon

By Tetsushi Kajimoto and Daniel Leussink

TOKYO (Reuters) – Japan’s exports logged a third straight month of double-digit gains in April led by U.S. demand, but surging global commodity costs inflated the country’s import bill to a record, adding to worries about the rising cost of living.

Shoring up the prospects of a private demand-led recovery, however, was a gauge of capital expenditure that posted its first monthly gain in three months.

The mixed data on Thursday followed the yen’s falls to two-decade lows beyond 131 to the dollar earlier in May, which stoked fears of worsening terms of trade and added financial burdens for the resource-poor Japanese economy as import costs soar.

A weak yen, once considered a boon to the export-led economy, is now having less of an impact as shipments grow smaller, given the ongoing shift by Japanese manufacturers to offshore production.

Japan’s exports rose 12.5% in April from a year earlier, Ministry of Finance data showed, led by U.S.-bound shipments of cars and undershooting a 13.8% increase expected by economists in a Reuters poll. It followed a 14.7% rise in March.

Imports rose 28.2% in the year to April, versus the median estimate for a 35.0% increase, as a weaker yen helped boost already surging global commodity prices.

That resulted in a trade deficit of 839.2 billion yen ($6.54 billion), narrower than the median estimate for a 1.150 trillion yen shortfall but posting a ninth straight month in the red.

Analysts have warned of the risks of prolonged cost-push inflation to the fragile economy with external factors, not domestic demand, pushing import bills higher.

Separate data showed on Thursday Japan’s core machinery orders rose 7.1% in March from the previous month, versus a 3.7% increase expected by economists in a Reuters poll.

The volatile data series, regarded as a leading gauge of capital expenditure in the coming six to nine months, provided a glimmer of hope for a domestic demand-led recovery.

Japan’s economy shrank for the first time in two quarters in the January-March period as COVID-19 curbs hit the service sector and surging commodity prices created new pressures.

($1 = 128.3600 yen)

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