- Yasunari Ueno, chief market economist at Mizuho Securities
A set of economic data from Japan painted a mixed picture with inflation and industrial production surpassing analysts' expectations, while improved labour market failed to persuade consumers to open their wallets. The national core CPI climbed only 0.3% year-on-year in April, a sharp deceleration from the 2.2% advance recorded a month earlier, with the impact of last year's consumption-tax increase dropping out of the CPI equation. Nonetheless, the figure was better than the expected 0.2% gain. In addition to that, Tokyo's inflation data showed the CPI inching higher 0.2% in May, sliding from the 0.4% rise seen in April. At the same time, Japan's industrial production increased 1.0% in April from the previous month, beating forecast for a 0.8% gain. Japan's manufacturers now anticipate May output will increase 0.5% on-month in May, up from the previous forecast for a 0.3% decline. Moreover, the country's employment picture brightened, as the seasonally adjusted jobless rate for April came in at 3.3%, compared with economists' expectations of 3.4%.
Nevertheless, consumer spending remained stubbornly weak, as it dropped 1.3% in April from the previous year. The decline was surprising considering the low level of spending in April 2014, in which the sales tax was hiked, sending consumption plunging and pushing the world's third biggest economy into contraction.
© Dukascopy Bank SA