TOKYO: Japan was clobbered with a one-two punch Friday as weak data and a lacklustre business confidence report underscored the slowdown dragging on the world’s number three economy.
The poor readings will heap pressure on policymakers to unveil more stimulus, after the yen surged again in the wake of Britain’s shock vote last week to quit the European Union, threatening Japan Inc’s profits. Friday’s data come ahead of parliamentary elections next week seen as a referendum on Prime Minister Shinzo Abe’s faltering plan to kickstart the economy, dubbed Abenomics.
Spending by households across the country fell in May while inflation dropped for a third straight month, official data showed Friday, in a fresh blow to Abe’s war on deflation. They were the latest in a string of figures – including an earlier drop in factory output — to raise concerns about Japan’s prospects.
While the labour market remained tight in May, there are growing concerns about second-quarter economic growth. Japan dodged a recession in the first three months of the year. “Today’s numbers underscored the weakness in consumer spending, which is likely to keep putting pressure on the Japanese economy,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute. Also Friday, the Bank of Japan’s closely watched Tankan survey showed confidence among small firms and non-manufacturers worsened during the second quarter of the year.
Sentiment among major manufacturers remained stuck at its lowest levels since Abe kicked off his much-vaunted programme to boost growth more than three years ago. The survey of over 10,000 companies is the most comprehensive indicator of how Japan Inc is faring.