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TOKYO — Japan’s economy is expected to have slowed markedly in the third quarter as global recession risks hurt external demand while rising inflation and a weak yen’s impact on imported prices forced consumers to keep their wallets shut.
Gross domestic product (GDP) data due 0850 local time Nov. 15 (2350 GMT Nov. 14) will likely show the world’s No. 3 economy grew at an annualized rate of 1.1% in July-Septerber, sharply slower from the 3.5% expansion in the second quarter.
That would translate into quarter-on-quarter growth of 0.3%, according to a Reuters poll of 18 economists, also slacking off from the 0.9% pace in April-June.
The significant slowdown in part highlights the harsh impact on Japan from the yen’s slide to 32-year lows against the dollar, which has exacerbated the cost-of-living strains by further lifting the price of everything from fuel to food items.
Prime Minister Fumio Kishida’s government is stepping up support for households to try to ease the effects of cost-push inflation, with a 29 trillion yen ($196.09 billion) in extra spending in the budget.
“Unlike Western countries, Japan has not experienced pent-up demand while service consumption at hotels and restaurants remains stagnant,” despite easing coronavirus curbs, said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Supply-side restrictions have also curbed car output,” he said, adding that “depending on the extent of slowdown in the global economy, Japan could follow suit and you cannot rule out the possibility that it slides into recession next year.”
Capital expenditure probably underpinned third quarter growth, is forecast to have risen 2.1% in July-September, versus 2% increase in the previous quarter, reflecting improved performance at big exporters and others thanks to the earnings boost from a weak yen.
External demand, or net exports — shipments minus imports — likely shaved 0.2 percentage points off GDP, after having added 0.1 percentage point to the second-quarter gain.
Private consumption that accounts for more than half the economy, is expected to have slowed to a crawl in the third quarter with an increase of 0.2% from a 1.2% gain.
Separate data by the internal affairs ministry is also set to underline the broad pressure across the economy, with the pace of growth in household spending seen almost halving to 2.7% year-on-year in September from 5.1% gain in August.
The strains on business showed no signs of easing either with input costs up sharply. Japan’s corporate goods price index, a barometer of wholesale prices that companies charge each other, is forecast up 8.8% year-on-year in October, easing from the previous month of 9.7%.
Household spending data will be released 0830 JST Nov. 8/ 2330 GMT Nov. 7 and corporate goods price index is due 0850 JST Nov. 11/ 2350 GMT Nov. 10.
Ministry of Finance (MOF) data, due out 0850 JST Nov. 9/ 2350 GMT Nov. 8 will likely show current account came to 234.5 billion yen ($1.58 billion) in September. ($1 = 147.8900 yen) (Reporting by Tetsushi Kajimoto Editing by Shri Navaratnam)
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
The Canadian Press. All rights reserved.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
The Canadian Press. All rights reserved.
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