MARKET MOVER - BNP PARIBAS - Investment Services India

Key Data Preview
Chart 13: Japanese Unemployment Rate (% sa)
5.7
5.5
5.3
5.1
4.9
4.7
4.5
4.3
4.1
3.9
3.7
3.5
00 01 02 03 04 05 06 07 08 09 10 11 12
Sources: MIC, BNP Paribas
BNP Paribas Forecast: Unchanged
Japan: Unemployment Rate (August)
Release Date: Friday 28 September
We expect the jobless rate for August to be unchanged from
July at 4.3%. Despite some degree of support from latent
demand from the nursing-healthcare industry, employment
conditions are likely to have started to weaken gradually, as
factory-sector activity remains flat because of the slowing
global economy and the effects of reconstruction demand at
home are waning. There are signs that job offers, which have
continued to steadily rise, could also be weakening. Even so,
because the effects of a rapidly greying population continue
to weigh on the jobless rate, the unemployment rate moving
forward should basically remain flat or modestly on the
decline.
% sa Aug (f) Jul Jun May
Unemployment rate 4.3 4.3 4.3 4.4
Key Point:
Although employment conditions are likely to start
weakening, the unemployment rate should stay flat or
modestly on the decline, as the effects of a rapidly
greying society continuing to weigh on the jobless rate.
Chart 14: Japanese Production and Exports
120
115
110
105
100
95
90
85
80
75
70
65
(2005=100, seasonally adjusted)
Production
00 01 02 03 04 05 06 07 08 09 10 11 12
Sources: METI. MOF, BNP Paribas
Exports (RHS)
Industrial production Aug (f) Jul Jun May
% m/m -0.7 -1.0 0.4 -3.4
Key Point:
With external demand dropping a further notch and
domestic car sales already tumbling, production in
August is likely to have been weak.
150
140
130
120
110
100
90
80
70
60
50
BNP Paribas Forecast: Decline
Japan: Industrial Production (August)
Release Date: Friday 28 September
We expect industrial production to have fallen 0.8% m/m in
August (-1.0% in July), a second straight contraction.
Corrected for the distortions that have plagued METI’s
seasonally adjusted data, factory output has been generally
trending sideways, but we project that even without
distortions, production should have declined in August. The
reason for the weakness is not the supply constraints
resulting from reduced summertime power consumption,
which have had only a marginal impact, but rather the
floundering of demand. Until now, weakness in overseas
demand has largely been offset by fiscal policy factors such
as the reconstruction-related spending and eco-car
subsidies. But with external demand dropping again
(previously firm exports to US have started falling) and
domestic car sales tumbling even before subsidy programme
ends in September, production in August is likely to have
been weak. While the forecast index projects a further
sideways movement of 0.1% m/m, the actual outturn should
be a contraction. Although we do not expect overall factory
activity to enter into a pronounced slowdown as long as the
global economy avoids a shock, such as a further deepening
of the European crisis, industrial output seems set to soften
further in the coming months owing to weakness in the global
economy and fallout at home from plunging cars sales.
Market Economics 20 September 2012
Market Mover
51
www.GlobalMarkets.bnpparibas.com