A batch of mixed economic data was released from Japan today. Industrial production rose 1.3% mom in July, well above expectation of 0.3% mom. Growth was supported by increased production of cars and chemicals, which offset decline in oil products. The somewhat solid rebound in production offered a hopeful sign that manufacturers are weathering global slowdown and escalation of US-China trade war so far.
On the other hand, retail sales dropped -2.0% yoy in July, much worse than expectation of -0.6% yoy. The contraction raised concerns that momentum of domestic demand was much weaker than originally expected. In particular, consumption could be further strained by the planned sale tax hike later in the year.
Also released, unemployment rate dropped to 2.2% in July, beat expectation of 2.3%. Housing starts dropped -4.1% yoy, versus expectation of -5.4% yoy. Tokyo CPI slowed to 0.7% yoy in August, down from 0.9% yoy, missed expectation of 0.8% yoy.
Bundesbank: Not Likely for slowdown to intensify markedly, no recession in Germany
Bundesbank warned in its monthly report that “the slowdown of the German economy will probably continue in the fourth quarter of 2019:. Though, it emphasized that “it is not likely to intensify markedly”. “As things currently stand, overall economic output could more or less stagnate.” And, “from today’s vantage point, there is no reason to fear that Germany will slide into recession”.
It also noted some tentative signs of stabilization in industrial demand. Meanwhile, domestic economy will continue to provide growth momentum. “Because the labor market is likely to remain fairly robust and wages are expected to grow considerably, households’ income prospects should remain favorable,” it added.