The weak survey data in Japan continues to pour in. The May forecast index from the Economy Watchers Survey tumbled to the lowest since June 2016. The forecast index for employment has also turned down, although so far, the trend for actual jobs growth has diverged from this indicator.
It may again be a case of hard versus soft data. In this context, Q2 has begun on a very strong footing. Real private consumption climbed 1.7% m/m in April based on the Synthetic Consumption Index produced by the Cabinet Office.
The tertiary activity index hit a record high at the start of Q2 (+0.8% m/m), surpassing the previous peak in January earlier this year. The latest rise was led by the beleaguered information & communications sector: activity rebounded 2.6% m/m and was up 1.8% y/y.
Living & amusement-related services (which include travel agencies & hotels) were another major contributor. Japan has now run a current account services surplus for three consecutive months.
Manufacturing is showing tentative signs of a recovery as well. Domestic private sector machinery orders (ex-volatile orders) climbed 5.2% m/m in April: the 3m/3m annualised rate jumped 9.1%.
