A brief look at Japanese economic indicators

September 20, 2011 – Japan is the third largest economy in the world. It is also the most studied because of its dramatic growth.

Like every other country in our global economy, Japan relies on economic indicators, or statistics released from government agencies that are used to measure economic and business conditions and make forecasts about what to expect in the future.

Gross Domestic Product
The gross domestic product (GDP) is one of the most important economic indicators used to determine the health of a country’s economy because it measures the overall production and consumption of its goods and services. Strong GDP usually signals higher economic activity, which in Japan’s case could lead to a higher demand for the Yen, while weaker GDP readings are signal of a softer economy.

Balance of Payments
Japan’s balance of payments reports shows the difference between the country’s total value of exports vs. its total value of imports. Typically a surplus indicates money flowing into Japan due to exported goods, while a deficit means that money is flowing out of Japan as imports are purchased at higher volumes.

Takan Survey
The Takan Survey is conducted by Japan’s central bank to help determine the country’s monetary policy. Released on a quarterly basis, the survey covers a range of business issues and indicates what to expect with the future direction of consumer prices, employment and the general economy. Additionally, the Takan Survey measures capital expenditures for all Japanese industries outside of the financial industry.

Domestic Corporate Goods Price Index
Released monthly from the Bank of Japan, the Domestic Corporate Goods Price Index (CGPI) measures the goods and services purchased by Japanese companies. It is closely tied with the Consumer Price Index (CPI), whereas if the CGPI and CPI both increase, the Bank of Japan may raise interest rates to curb inflation.

Monetary Policy
The Bank of Japan releases its monetary policy report each month, which covers trends in the country’s economy, along with relevant international economic events. Since the Bank of Japan is charged with setting monetary policy, the report provides insight to what may occur with future interest rates. A more cautious tone may suggest the likelihood of higher rates, which an optimistic outlook suggests rates are less likely to increase.

Japanese Employment Situation
The employment report covers current employment figures and spending patterns that may lead to higher wages and possible inflationary pressures. Used as a gauge for the overall Japanese economy, the report also covers the release of five potential market-moving figures including the jobless rate, job-to-application ratio, personal income and household spending.

Japanese Condominium Sales
Tokyo’s condominium sales report only focuses on a narrow portion of the country’s housing sector, but it serves as a leading indicator for the overall housing market. Increasing sales generally indicate economic growth is on its way, while decreasing sales indicate a slower economy may be approaching.

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One thought on “A brief look at Japanese economic indicators

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