Will the Japanese Economy Contract in Q4 2019?
Industrial output in Japan continued to decline for the second consecutive month during November, raising concerns of a contraction in the economy in Q4 2019. Factory output declined by 0.9% MoM during November, but beat expectations which were for a 1.4% decline for this period.
Meanwhile, October’s data was revised to reflect a 4.5% decline MoM, which was the largest monthly decline on record. Analysts expect the contraction to continue in December, causing considerable strain on the economy in the fourth quarter of the year. However, industrial output is expected to post a rebound in Q1 2020, but the extent of recovery remains unclear so far.
In more disappointing news, retail sales in Japan contracted by 2.1% in November, driven lower as a consequence of the sales tax hike which was implemented in October. Consumer sentiment has worsened by more than expected, adding more pressure on the already strained economy.
On the positive side, however, the seasonally adjusted unemployment rate in Japan has fallen to 2.2% in November following a reading of 2.4% in October. The figure has beaten economists’ forecast, which was for the jobless rate to remain steady instead of declining.
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