Japanese Manufacturing Sentiment Heads Lower

April's survey of Japan's manufacturing firms printed at 48.6, below the "boom-bust" 50 level and lower than last month's result. Manager's assessment of export growth fell -2.7%, while the outlook for the overall quantity of purchases declined -3.8%. Japan has long depended on foreign demand to make up for soft domestic consumption. Now, it seems the US-led global slowdown has taken away the last pillar supporting continued economic expansion. The Bank of Japan is expected to keep rates on hold at 0.5% this week as policymakers are torn between energy-driven inflation and derogating growth. Earlier in the week, a marginally positive headline Retail Sales figure proved to owe more to higher oil costs than any actual consumption growth. The question at this point is surely not "if" the Japanese economy will slip into recession, but for "how long?"

DailyFX

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