Arranged for Global Interdependence Center Program in Milan
May 10th , 2013
Recent development of Japanese Economy ～ What is happening by ABENOMICS? ～
Kozo Koide Chief Economist DIAM Co.,Ltd
Comment on ABENOMIX
ABENOMICS : Three Arrows
Bold monetary policy, Flexible fiscal spending, & Growth strategy – 1. Bold monetary policy » BOJ launched inflation target at 2% at the latest policy meeting (1/22) with open-end asset purchase program. Issued joint announcement with government. » Assign new BOJ Governor & Deputy Governor to facilitate bolder QE.
– 2. Flexible fiscal spending » Government launched 13.1 Tyen supplemental budget, 2nd largest in the past. (1/15) 5.2 Tyen public construction & (about 3.3 public consumption at most). Estimation: +1.1 to +1.6% push up of GDP, +0.7 to +1.0% contribution within 2013fy.
– 3. Growth strategy » Supposed to be launched toward June. Already committed to start TPP negotiation Targeting policies (ex : tax incentives for employment. healthcare, women, energy) Deregulation (ex : nursery care station) 1
Kozo Koide, Chief Economist DIAM
Comment on ABENOMIX
Kuroda Shock : “Regime Change” To double monetary base with inflation target at 2% in next two years – “Quantitative & Qualitative Easing” , “Different level easing” – 1. Monetary base target (60 to 70 Tyen), 2. Purchase JGB with longer average duration (from 3years to 7 years), 3. Expand purchase of ETF & J-REIT – Integrate APP & Outright purchase of JGB (Rinban), Lift-up of BOJ Note Rule < Monetary Base: Banknotes （ YoY） >
％
40
NSA
A' - B' Monetary Base(*) YoY (A') Banknotes in Circulation YoY (B')
30 20 10
0 ▲10 ▲20 * NSA, unadjusted reserve rate data
Source: BOJ
2
13.01
12.01
11.01
10.01
09.01
08.01
07.01
06.01
05.01
04.01
03.01
02.01
01.01
00.01
▲30 99.01
DIAM Economic Research
Kozo Koide, Chief Economist DIAM
Comment on ABENOMIX
Weakened Credit Multiplier Effect Credit multiplier under the deflation has come down to very low level. – Marginal credit multiplier has become very volatile and low (sometimes negative).
< Monerary Base & Credit Multiplier>
YoY (%)
3
13.5 13.0 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5
Monetary Base Credit Multilier(RHS)
Source:BOJ
13.04
12.04
11.04
10.04
09.04
08.04
07.04
06.04
05.04
04.04
03.04
02.04
01.04
00.04
99.04
98.04
97.04
96.04
95.04
94.04
93.04
92.04
91.04
90.04
89.04
88.04
87.04
86.04
85.04
84.04
(Note)M2 : Connected the former data set using MoM change after S.A.
83.04
50 45 40 35 30 25 20 15 10 5 0 ▲5 ▲10 ▲15 ▲20 ▲25 ▲30
82.04
DIAM Economic Research Kozo Koide, Chief Economist DIAM
Comment on ABENOMIX
Weakened Relation between Money & CPI
Under the deflation, growth of money has almost lost its effect on CPI. If we aim for inflation solely by QE, the size would be gigantic. CPI Core
< M ２ (YoY） ・ CPI Core （ YoY） >
（ YoY ％） 9 8 7
３ MMA
1980/01～2013/2 1995/01～2013/3
6 5
y = 0.2665x - 0.228
4 3 2 1 0 ▲1
y = 0.0328x - 0.1574
▲2 ▲3 ▲2
M2(YoY%) ▲1
0
1
2
3
4
5
6
7
8
9
Source : BOJ, Ministry of Internal Affiairs & Communications
4
Kozo Koide, Chief Economist DIAM
10
11
12
13
DIAM Economic Research
14
Comment on ABENOMIX
Kuroda Shock : “Still Channels are Open”
Kuroda emphasized a room for additional easing effect under deflation – 1. Interest rate channel : to push down longer-term interest rate. » In Shirakawa Era : long term interest rate can not be controlled by BOJ, dangerous to rip off the efficiency in the market. But this time BOJ will soak up about 70% of new issues
– 2. Portfolio rebalancing channel : facilitate reallocate assets to riskier assets » Financial institution, households (& corporations): hard to accept too low fixed income from cash & deposits.
– 3. Expectation channel : boost inflation expectation in markets, households & corporations. Governor Kuroda emphasize this channel in particular. » Aggressive QE with clear cut commitment of BOJ will change the expectations. » Not proved authentic theory to argue direct causality from QE to expectation. Now leading studies have been appearing but the outcomes are diversified. Woodford(2010), Thornton(2012), Hoffman & Zhu(2013) 5
Kozo Koide, Chief Economist DIAM
Expectation Chanel
Expectation Chanel : May Exist through TSE ‹
Chanel through assets markets exist, that through expectation is hazy
6
Kozo Koide, Chief Economist DIAM
Comment on ABENOMIX
Inflation Expectation : Picked Up Already
D.I. of expected inflation by households & corporations are picking up – Though causality directly from monetary base to expected inflation by households and corporations are seemed to be weak, they have already been picking up. – Besides the economic recovery with the progress in inventory adjustment together with the correction of too high yen and the rise of stock price. < CPI (core)・ Expected Inflation D.I. Of Households >
%pt 110 100 90 80 70 60 50 40 30 20 10 0 10 ▲ ▲20
%pt
％
30
2.5
20
< PPI ・ Expected Sales Price D.I. of Corporations >
2.0 1.0 0.5 0.0 ▲0.5 ▲1.0 ▲1.5 ▲2.0
Source ： Cabinet Office,Ministry of Internal Affairs & Communications
7
13.04
12.10
12.04
11.10
11.04
10.10
10.04
09.10
▲2.5 ▲3.0 09.04
08.10
08.04
07.10
07.04
06.10
06.04
05.10
05.04
04.10
04.04
Expected Inflation D.I. Core CPI（ YoY,Right Scale)
DIAM Economic Research
10 0 ▲10 ▲20 ▲30 ▲40 Expected Sales Perice D.I. (Large Manufacturing) PPI(domestic final goods excluding consumption tax)
▲50 ▲60
9 8 7 6 5 4 3 2 1 0 ▲1 ▲2 ▲3 ▲4 ▲5 ▲6 ▲7 ▲8 ▲9 ▲10
86.03 87.03 88.03 89.03 90.03 91.03 92.03 93.03 94.03 95.03 96.03 97.03 98.03 99.03 00.03 01.03 02.03 03.03 04.03 05.03 06.03 07.03 08.03 09.03 10.03 11.03 12.03 13.03
1.5
％
Source : BOJ
Kozo Koide, Chief Economist DIAM
DIAM Economic Research
Comment on ABENOMIX
Deflation Gap, Possibly Overestimated Deflation gap may be about half of the estimation by the government.
– Production capacity DI in Tankan has been deviating the capacity utilization rate. Possibly obsolete facilities has been left unused to be filed in capital stock data. – Deflation gap estimated by Tankan DI of capital and labor, the gap is much smaller. DI(Excessive
< Manufacturing: Tankan Production Capacity / Manufacturing CapacityUtilization Index >
- Insufficient）
120
FY2005=100
60
Production Capacity DI （Manufactuing / All sizes）
100
Manufacturing capacity utilization index (SA, RHS）
70
2.0 1.0
60 40 20
80
0.0
90
▲1.0 ▲2.0 ▲3.0
100 ▲4.0
▲5.0 110 ▲6.0 ▲7.0
0
Source: BoJ, METI
8
GDP Gap (estimated by Tanakan DI) Estimated by Cabinet Office
DIAM Economic Research Source: CAO, BOJ
Kozo Koide, Chief Economist DIAM
12.12
10.12
08.12
06.12
04.12
02.12
00.12
98.12
96.12
94.12
92.12
90.12
12.03
10.03
08.03
06.03
04.03
02.03
120 ▲8.0 00.03
98.03
96.03
94.03
92.03
90.03
88.03
86.03
84.03
82.03
80.03
Note: There is no continuity between the figures up to the December 2003 survey and those from March 2004 survey.
78.03
▲40
4.0 3.0
80
▲20
< GDP Gap >
％
DIAM Economic Research
Comment on ABENOMIX
Deflation Pressure from China, Eased
Unit labor cost in China continue to soar, while Japanese stay stable. – 2005=100 : 2012/3Q (4QMA) China 297, Japan 104 – The import from China has not so deeply discounted recently.
< China：Unit Labor Cost（Mfg.）YoY >
％
45
4QMA
％
0.0
40
< CPI (weighted by the import from China) (YoY)> (note) CPI of items which are matched with the components of imports from China.Weighted average by the value as of 2005cy.
▲5.0
35 30
▲10.0
25 20
▲15.0 15 10 (Note) ULC = Wage (manufacturing) / IIP IIP for 1Qis the average of previous Q and next Q
DIAM Economic Research
9
Source: MOF, Ministry of Internal Affairs and Communications
Kozo Koide, Chief Economist DIAM
13.01
12.07
12.01
11.07
11.01
10.07
10.01
09.07
09.01
08.07
08.01
07.07
07.01
12.12 13.03
12.06 12.09
11.12 12.03
11.06 11.09
10.12 11.03
10.06 10.09
09.12 10.03
09.06 09.09
08.12 09.03
08.06 08.09
07.12 08.03
07.06 07.09
06.12 07.03 Source: NBS
06.07
▲25.0
0
06.01
5
▲20.0
DIAM Economic Research
Comment on ABENOMIX
Depreciation of Yen Would Roll On
The interest differentials between US & Japan will expand. – Recently the sensitivity of yen rate against real expected interest rate differentials has been elevated. yen/$
< $/Yen Rate & Interest Rate Differentials >
Log10
%
$/Yen Rate (Log10) Interest Rate Differentials between US & Japan (3 year government bond,RHS)
2.25
7.0
< Yen/$ Rate & Real Expected Interest Rate Differentials>
100
0.2
6.5 2.20
Sensitivity of interestrate differentials has been elevated
2.15
6.0 5.5
95
5.0 4.5
2.10
4.0
%
90
yen/$ rate
0.0
Real Expected Interest Rate differentials (5ys) RHS
▲0.2 ▲0.4
3.5
2.05
3.0 2.5
2.00
▲0.6
85
▲0.8
2.0 1.5
1.95
1.0
80
▲1.0
0.5
10
DIAM Economic Research
Source : BOJ, Bloomberg
Kozo Koide, Chief Economist DIAM
13.05
13.04
13.03
13.02
13.01
12.12
12.11
12.10
12.09
12.08
▲1.2 12.07
12.10
11.10
10.10
09.10
08.10
07.10
06.10
05.10
04.10
03.10
02.10
01.10
00.10
99.10
98.10
97.10
96.10
95.10
94.10
93.10
92.10
91.10
90.10
89.10
Soure：Datastream, BoJ
75 12.06
▲0.5
1.85
12.05
0.0
(Shadow）：Recession in Japan
12.04
1.90
DIAM Economic Research
Comment on ABENOMIX
Depreciation of Yen Would Roll On The current account surplus of Japan has been dramatically shrunk. – The biggest reason is the sharp rise of LNG import after the tsunami. < Current A/C of Japan & $/YEN Rate >
log10
$/YEN Rate JPN:Current Account / Nominal GDP (4QTotal % , 1Y leading RHS)
2.20
0.5 1.0
2.15
1.5 2.10
2.0 2.5
2.05
3.0 2.00
3.5 4.0
1.95
4.5 1.90
5.0 5.5 15.09
13.09
11.09
DIAM Economic Research
Source : BoJ
11
09.09
07.09
05.09
03.09
01.09
99.09
97.09
95.09
93.09
91.09
89.09
1.85 87.09
Kozo Koide, Chief Economist DIAM
Comment on ABENOMIX
Harbinger to be Levered Again
Bank lending has resumed to grow again. – 2013/03: +1.7%(YoY), +0.1%(s.a. MoM) grew 10 months in a row.
Corporations has resumed to be levered again after a long blank. – The financial leverage of large corporations was elevated in 2012 for the first time since 1976. < Loans and Discounts (Average Amounts Outstanding, YoY) >
%
< Fianacial Leverage Ratio(Large Corporations) YoY >
％
5.0
12
4Q average
a: Bank total (After adjustments)
4.0
10 8
3.0
6
2.0
4
1.0
2
0.0
0 ▲2
▲1.0 ▲4
▲2.0
▲6 (Note): Total Assets / Capital
Gray Shadow : Recession
▲3.0
Source: MOF DIAM Economic Research
Source: BOJ
12
Kozo Koide, Chief Economist DIAM
12.06
10.06
08.06
06.06
04.06
02.06
00.06
98.06
96.06
94.06
92.06
90.06
88.06
86.06
84.06
82.06
80.06
78.06
76.06
74.06
72.06
70.06
68.06
66.06
64.06
62.06
60.06
13.01
12.07
12.01
11.07
11.01
10.07
10.01
09.07
09.01
08.07
08.01
07.07
07.01
06.07
06.01
05.07
05.01
04.07
04.01
03.07
03.01
02.07
02.01
01.07
01.01
▲8
DIAM Economic Research
Wage Increase : Macro Change w/ Policy
Non-structural unemployment is decreasing, Expected tax incentives – Gap between employment and structural employment has been squeezed, which is putting upward pressure in wage. – Labor Evaluation DI (Tankan) has turned into net shortage in March. – Abe Government : Planning tax incentives for wage incentives. Point is not to incentives for employment. Government would facilitate flexible labor shift. < Unemployment Rate Caused by Lack of Demand & Nominal Hourly Wage Index >
％
Nominal Hourly Wage Index(YoY) Unemployment Rate Caused by Lack of Demand(Right Scale, Inverse Scale)
8 7
< TANKAN : Production Capacity・ Employment Conditions DI (all industries & all sizes) >
％
▲0.4 ▲0.2
DI(Excessive-Insufficient) 30
E
20
6
∵Deregulation at the Labor Market
5
0.0
10 0
4
0.2 ▲10
3 0.4 2
▲20
▲40
Note : There is no continuity between the figures up to the December 2003 survey and those from the March 2004 survey.
Source : Ministry of Health, Labour, & Welfare, Ministry of Internal Affairs & Communications
13
Source:BOJ
DIAM Economic Research
Kozo Koide, Chief Economist DIAM
13.03
12.03
11.03
10.03
09.03
08.03
07.03
06.03
05.03
04.03
03.03
02.03
01.03
96.03
95.03
Production Capacity 94.03
93.03
92.03
91.03
90.03
89.03
88.03
87.03
86.03
85.03
84.03
83.03
Employment Conditions 82.03
▲60 81.03
1.2
80.01 81.01 82.01 83.01 84.01 85.01 86.01 87.01 88.01 89.01 90.01 91.01 92.01 93.01 94.01 95.01 96.01 97.01 98.01 99.01 00.01 01.01 02.01 03.01 04.01 05.01 06.01 07.01 08.01 09.01 10.01 11.01 12.01 13.01
▲3
▲50
80.03
▲2
1.0
00.03
0.8
▲1
99.03
0
Average from 94/3～09/6（３ Business Cycles) Both Production Capacity & Employment
▲30
98.03
1
97.03
0.6
DIAM Economic Research
Views on Tokyo Equity Market
NIKKEI : Depends on the Exit from Deflation Deflation → NIKKEI’s sensitivity to corporate profits lowered
– Now, almost a mirror of JGB yield. Even so, the higher target at the end of ’12 was about 12400. Current surge is not a bubble, no excess liquidity is taken into account. – In ’98 (worst year of financial crisis) : Corporations became a large saver. Deflation → debt & depreciation grow in real term. Cut debt with cap-ex, lower total factor productivity. – What if deflation is over? Levered with cap-ex for higher total factor productivity. Higher sensitivity to corporate profits, 18700 as of the last year-end – Retrospect on what I told before large US macro hedge fund in Oct. ’04, 12000 or 18000? < N IK K E I2 2 5 : E s tim a tio n > 4 0 ,0 0 0
< C a pex & D e pre ciatio n C o st (L arg e C o rpo ratio ns) >
1 00 M il Ye n 4 5 0,00 0
N ikke i225 E st. 3 (b y c o r p o r a te p ro fi ts & J B G y i e l d , fr o m '9 5 ) E st. 2 (b y c o r p o r a te p ro fi ts, J G B y i e l d , e x c e ss l i q u i d i ty , i n '8 0 s) E st. 1 (b y c o r p o r a te p ro fi ts, J G B y i e l d , fr o m '8 0 -'8 4 ）
4Q M A
D e pr ec ia tio n C o st C a pi tal E xp en di tu re C a sh F low
4 0 0,00 0
3 5 ,0 0 0
W h a t H a ppe n e d? ?
3 5 0,00 0
3 0 ,0 0 0 2 5 ,0 0 0
3 0 0,00 0
2 0 ,0 0 0 2 5 0,00 0
1 5 ,0 0 0 1 0 ,0 0 0
2 0 0,00 0
S o u rc e : D a ta s tre a m , M o F , B o J
14
Sour ce:M OF
D IA M E c o n o m i c R e se a r c h
Kozo Koide, Chief Economist DIAM
13.03
12.03
11.03
10.03
09.03
08.03
07.03
06.03
05.03
04.03
03.03
02.03
01.03
00.03
99.03
98.03
97.03
96.03
95.03
94.03
93.03
1 5 0,00 0 92.03
12.12
10.12
08.12
06.12
04.12
02.12
00.12
98.12
96.12
94.12
92.12
90.12
88.12
86.12
84.12
82.12
80.12
0
91.03
( N o te ) N ikke i2 2 5 f o r '1 3 /1 - 3 Q is th e a v e r a g e f r o m '1 3 /1 - '1 3 /2 /1 4
90.03
5 ,0 0 0
D IA M E co n o m ic R es earc h
Views on Yen, additionally
Yen in a Cristal Ball : Easier to See Cheap ¥ Easier to explain cheap yen – Estimated by PPP(OECD for GDP), Current A/C(JP), Interest rate differentials(2Y) » 90.17 yen/$ (±σ：81.25 – 100.08) : timeframe(’87-’12) » 111.82 yen/$ (±σ：102.75-124.75） : timeframe(’87-’09), before the sensitivity against euro risk premium has elevated. yen/$ < YEN/$ : Estimation - 1 > 140
YEN/$ (Estimation)、 dotted line : ±σ
YEN / $
130 120 110 100.08 100 90.17 90 81.25 80 Estimated by PPP(OECD), Current A/C, Interest deffrentials(2Y, ’05-）, '87 - '12
Source : Datastream, Bloomberg, BOJ, OECD
15
12.06 12.09 12.12
11.03 11.06 11.09 11.12 12.03
09.12 10.03 10.06 10.09 10.12
08.06 08.09 08.12 09.03 09.06 09.09
07.03 07.06 07.09 07.12 08.03
05.12 06.03 06.06 06.09 06.12
70 05.03 05.06 05.09
DIAM Economic Research
Kozo Koide, Chief Economist DIAM
Views on Yen, additionally
Currency War !? : Unfair to Criticize Japan No currency intervention, Distorted appreciation for years – Basically under the floating exchange regime, Japan has autonomy in monetary policy. – CF: PPP for GDP (OECD) in 2012: » Japan: 103.90 (yen/$) 30.2% higher. Germany: 0.799(€/$）2.7%higher, Korea: 815.93(KW/$) ▲27.6％cheaper ％
< Diviation of FX Rate from PPP>
100
Japan
Germany
Korea
80 60 40 20 0 ▲20 ▲40
2011
2009
2007
DIAM Economic Research
Source : OECD, Datastream
16
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
▲60 1985
Kozo Koide, Chief Economist DIAM
Comment on ABENOMIX
JGB : Higher Long-term Rate !?
JGB yield has gone up with bear flattening after the easing – The purchase amount with shorter duration than 5 years was smaller than expected. Those for 5years to 10 years is more than expected. – BOJ may have another communication problem going forward. – Three deferent opinions about yield curve under aggressive QE. ％
< JGB Yield Curve > 2012/12/28
0.8
2013/3/29
2013/5/10
0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0
1
2
Source：Bloomberg
17
3
4
5
6
7
8
9
10
Year DIAM Economic Research
Kozo Koide, Chief Economist DIAM
APPENDIX
18
Kozo Koide, Chief Economist DIAM
Reading of recent major economic data
GDP: Hitting its Bottom Real GDP (Oct.- Dec. Q) : SAAR QoQ +0.04%, after down for 2Qs – Public spending and personal consumption contributed positively, but export, private capital expenditure and inventory investment contracted. Consumption bottomed from the decrease after the lift up tax incentives. – Expected to turn to be positive from Jan.-Mar. Q – 2013FY(my forecast) : +2.3% (← +1.0%), public sector +0.7%, front-loaded demand before the tax hike +0.7%. Government forecast is 2.5%, consensus is a bit below 2%. ％ < Real GDP (QoQ Contribution)> 4.0
Public Sector
3.0 Net Export
2.0 1.0
Residential Investment
0.0
Inventory Investment
▲1.0 ▲2.0
Private Capital Expenditure
▲3.0
Personal Consumption
▲4.0
Source:Cabinet Office
19
13.03
12.09
12.03
11.09
11.03
10.09
10.03
09.09
09.03
08.09
08.03
07.09
▲5.0 07.03
GDP
DIAM Economic Research
Kozo Koide, Chief Economist DIAM
IIP: Increased for the 1st Time in 4 Quarters
Industrial Production (Mar.): +0.2% MoM (← +0.6% in Feb.) – Lower than the consensus of +0.4% but increased for four months in a row. Shipment increased (+0.3%) for second straight month. Inventory decreased (-0.2%), then the inventory ratio was down (-1.2%) six months in a row. – The forecast for Apr. is +0.8% and for May. is -0.3%. 1Q’s IIP increased by +1.9%, up for the first time in four quarters. (4Q was -1.9%). – Apr.- Jun. Q : IIP is expected to grow with much clear momentum
20
DIAM Economic Research
Source : METI
Kozo Koide, Chief Economist DIAM
Disruption by East Japan Great Earthquake
60 55
13.04
13.01
12.10
12.07
12.04
12.01
11.10
11.07
50 11.04
13.05
13.01
12.09
12.05
12.01
11.09
11.05
11.01
10.09
10.05
10.01
09.09
09.05
09.01
08.09
08.05
08.01
07.09
07.05
07.01
Source : METI
11.01
95
70
65
Rivision of Forecast (2mts before vs 1mt before) : A Gap between Real Figure & Forecast: B A+ B Industrial Production(sa,right scale) 10.10
75
105
70
10.07
E：Es tim ate
75
10.04
115 80
80
10.01
85
85
09.10
125
90
09.07
90
95
09.04
135
95
100
09.01
100
105
08.10
145
110
08.07
E
115
08.04
155
Inventory Ratio (fine line : monthly) RHS
105
120
08.01
Production (fine line : monthly) 110
< Survey of IIP Forecast >
％ 6 4 2 0 ▲2 ▲4 ▲6 ▲8 ▲10 ▲12 ▲14 ▲16 ▲18 ▲20 ▲22 ▲24 ▲26 ▲28
07.10
165
07.07
3mma
07.04
< Industrial Production & Inventory Ratio >
07.01
FY2005=100 115
DIAM Economic Research
Real Consumption : Increased Sharply
Real Consumption Expenditure (Mar.): +2.0% MoM, +5.7% YoY – Total and core (excluding items not used for GDP calculation due to a large sampling bias) has been bottomed out in the last autumn and maintain an upward trend. – The average propensity to consume is at around the highest level since 2000.
FY2010=100
< Household Survey （ All HH） : Real Consumption Expenditure （ S.A. Real Index） >
％ FY2005=100 < Average Propensity to Consume （Workers' HH） / Real Disposable Income > 3mma
110
Including Farmers & Fishermen
77
Total Total ex. Housing, Purchase of Vehicles, Money Gifts & Remittance Core *
104
78
3mma, SA
108
76
106
103
75
102
74
101
73
102
72
100
100
104
71 99
98
70
98 * Core : Excluding volatile items not used for the calculation of GDP
97
96
69
Real Disposable Income （RHS）
68
Average Propensity to Consume
94 Gray Shadow: Recession
67
Source: MIC
DIAM Economic Research
21
Source: MIC
Kozo Koide, Chief Economist DIAM
13.03
12.09
12.03
11.09
11.03
10.09
10.03
09.09
09.03
08.09
08.03
07.09
07.03
06.09
06.03
05.09
05.03
04.09
04.03
03.09
03.03
02.09
02.03
01.09
01.03
00.09
92 00.03
13.01
12.09
12.05
12.01
11.09
11.05
11.01
10.09
10.05
10.01
09.09
09.05
09.01
08.09
08.05
08.01
07.09
07.05
07.01
96
DIAM Economic Research
Machinery Order: Slow to Recover, to Grow Domestic Core (Feb.): +7.5% MoM, -11.3% YoY
– Up for the first time in two months and above the consensus of +6.9% MoM. – Manufacturing sector is weak. Cap-ex plan for 2013fy at the beginning is weak regardless of the recent correction of high yen. – But the current marginal growth of capital stock is only matched with about +0.5% real potential growth at most. It should grow.
110
16 14
105
12
100
10
Connected to new classif ication f rom A pril, 2005 excl. mobile phone orders f rom A pril, 2005 *V olitile orders: Orders f or ships and those f rom electric pow er companies
70 65
Source: Cabinet Office, METI
22
13.01
12.07
12.01
11.07
11.01
10.07
10.01
09.07
09.01
08.07
08.01
07.07
07.01
06.07
06.01
05.07
05.01
04.07
60 04.01
03.07
03.01
02.07
02.01
01.07
00.01
6,000
01.01
Gray Shadow: Reces s ion 00.07
6,500
DIAM Economi c Resea r ch
*Volatile orders: Orders for ships and those from electric pow er com panies. *Relatecd export : Transportation m achinery, Electronic Machinery, Precision
▲8 ▲10
Source:Cabinet Office
Kozo Koide, Chief Economist DIAM
13.01
7,000
0 ▲2 ▲4 ▲6
12.10
75
12.07
80
12.04
7,500
4 2
12.01
85
11.10
90 8,000
8 6
11.07
95
8,500
3mma, NSA
Mfg.(Related to Domestic Consumption) Private Sector(exc.Volatile orders)
11.04
9,000
％
11.01
9,500
Mfg.(Related to Export) Non-Mfg.(exc.Volatile orders)
10.10
115
10,000
< Machinary Orders (Core)：YoY Contribution >
120
10.07
M achine r y Or de rs (Pr ivate s e ctor e xc. *V olitile or de r s , 3M ahe ad) Capital Goods Shipm e nt （ e xc. Tr ans por tation M achine r y） , RHS
3mma, SA FY 2005=100
10.04
< Machinery Orders & Capital Goods Shipment >
10,500
10.01
(100Mil. Y en)
DIAM Economic Research
Reading of recent major economic data
Economy Watchers Survey : High Level
Apr. : Current DI 56.5 (MtM -0.8), Future DI 57.8(MtM +0.3) – Future DI marked historical high (highest since 2000). – Real economy (such as All Industry Activity Index) will follow toward the middle of the year. < Economy Watchers Survey (DI) >
（DI ) 60
(DI) 60
55
55
50
50
< Economy Watcher's DI & All Industries' Activity Index >
％
4.0 3.0 2.0 1.0
45
45 40
0.0
40
▲1.0
35
▲2.0
30
▲3.0
35 30
▲4.0
25
▲5.0
25
20
Future
20
Current
15
15
EconomyWatcher's DI (Future)
▲6.0
All IndustryActivity Index (3mma, YoY, RHS)
▲7.0 ▲8.0
Source:Cabinet Office
23
02.01 02.07 03.01 03.07 04.01 04.07 05.01 05.07 06.01 06.07 07.01 07.07 08.01 08.07 09.01 09.07 10.01 10.07 11.01 11.07 12.01 12.07 13.01
00.01 00.07 01.01 01.07 02.01 02.07 03.01 03.07 04.01 04.07 05.01 05.07 06.01 06.07 07.01 07.07 08.01 08.07 09.01 09.07 10.01 10.07 11.01 11.07 12.01 12.07 13.01
10
DIAM Economic Research Source : Cabinet Office, METI
Kozo Koide, Chief Economist DIAM
DIAM Economic Research
Disclaimer
This documentation was prepared independently by DIAM Co., Ltd. and is not required pursuant to the Financial Instruments and Exchange Law. This documentation is required to be used only by the investor to whom it is distributed. This documentation is only for the purpose of providing information and is not intended to be used to solicit investments. This documentation was prepared using data that DIAM Co., Ltd. has judged to be reliable. However, DIAM Co., Ltd. does not guarantee its completeness or accuracy. Additionally, the published data are only indicative of past performance and do not provide a guarantee of future performance. The contents included in this documentation are only current as of the date this documentation was prepared (May 10th, 2013) and are subject to change without notice. The intellectual property and all other rights pertaining to the data published in this documentation including benchmark indices shall remain the property of the publisher and licensor.
24
Kozo Koide, Chief Economist DIAM