MARKET MOVER - BNP PARIBAS - Investment Services India

Key Data Preview
3
2
1
0
-1
-2
-3
Chart 13: Japanese CPI (% y/y)
CPI excluding energy and food, but not alcohol
Core CPI
02 03 04 05 06 07 08 09 10
Source: MIC, BNP Paribas
% y/y Aug (f) Jul Jun May
Core CPI -1.0 -1.1 -1.0 -1.2
CPI -0.9 -0.9 -0.7 -0.9
BNP Paribas Forecast: Slightly Smaller Decline
Japan: CPI (National, August)
Release Date: Friday 1 October
The rate of decline in national core CPI deepened 0.1pp in
July to -1.1% y/y as the decline in food prices accelerated
slightly and price growth in petroleum products slowed.
Other national price indices were either unchanged –
US-style core CPI came in at -1.5% y/y – or improved: the
negative margin of the “10% trimmed mean CPI” eased
0.2pp to -0.5% y/y. Based on CPI data for Tokyo in August,
we estimate that the national index in August should
rebound and improve 0.1 pct point to 1.0%. Thanks to
improvements in the output gap, the downturn in consumer
prices is steadily easing. While such moderating of
deflationary pressures is expected to continue, the pace
moving forward will be tempered by slower improvements
in the output gap and yen appreciation.
Key Point:
We expect, based on Tokyo’s CPI data for August,
that the rate of decline in the national core index will
ease by 0.1pp to -1.0% y/y in August.
Chart 14: Japanese Unemployment Rate (% sa)
6.0
5.5
5.0
4.5
4.0
3.5
00 01 02 03 04 05 06 07 08 09 10
Source: MIC, BNP Paribas
% sa Aug (f) Jul Jun May
Unemployment rate 5.2 5.2 5.3 5.2
Key Point:
Improvements in the unemployment rate have stalled
of late as better economic conditions have
encouraged a growing number of people to quit work
in the hope of finding better employment while
prompting formerly discouraged workers to return to
active job seeking.
BNP Paribas Forecast: Flat
Japan: Unemployment Rate (August)
Release Date: Friday 1 October
We expect the unemployed rate in August to be unchanged
from July at 5.2%. In July, the unemployment rate fell 0.1pp
from June, marking the first improvement in six months.
After hitting an all-time high of 5.6% in July 2009, the
unemployment rate rapidly fell until January, when
improvements essentially stalled. That this should happen,
while the economy this past year has expanded at around
an annualised 4% on average, is due to stronger economic
conditions, which have prompted many discouraged
workers to return to active job seeking and encouraged
dissatisfied jobholders to voluntarily quit one position in the
hope of landing a better one. Meanwhile, job growth is also
still slow in recovering, as corporations, which kept payrolls
intact by cutting working hours during the recession, are
now responding to the improving economy with increased
working hours, rather than hiring.
Market Economics 23 September 2010
Market Mover
60
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