The Bank of Japan published a more detailed breakdown of real exports on Monday, showing a 6.9% m/m jump in shipments to the US in April. Japan’s trade surplus with the US has spiked.
Overall, Japanese real imports expanded in March and April too. Nevertheless, calls for a postponement of the planned consumption tax hike are growing. Service sector activity dropped off in the latter part of Q1. Accelerating consumer price inflation may indeed moderate in May. This week’s services PPI release for April was soft too.
However, price pressures are intensifying in a few notable sectors, including real estate services, leasing & rental and finance & insurance. Real estate is showing signs of life again in Japan. The 3-month moving average for the real estate activity index hit a record in March.
Land prices are rising at an increasing rate, particularly commercial. The Japanese Real Estate Institute (JREI) released its semi-annual report on land prices on Tuesday. Commercial land prices in the six large city areas grew 9.2% y/y in March, a new cyclical high. Rising tourist numbers have helped, in part, to fuel this revival.
Sectors that have long been dormant since the bursting of the property bubble are making a comeback. This may not be enough to offset the fallout from manufacturing. Friday’s labour force survey will once again be a good barometer of the state of the Japanese economy.
