Japan GDP expanded by an annualized real 0.1% of in Oct.–Dec period

Japan’s economy in the October–January period grew a real 0.0% from the previous quarter, or an annualized 0.1%. This growth was driven by a recovery in private consumption following the easing of COVID-19 restrictions. However, the expansion was weaker than expected. Private consumption increased by 0.3% for the third consecutive quarter, with consumers increasingly dining out and traveling. Demand for durable goods also remained strong. Public investment decreased by 0.3%, while company investment fell by 0.5%, after two straight quarters of strong gains, mainly due to a decrease in semiconductor-related investments. Private residential investment fell by 0.1%, declining for the seventh consecutive quarter. Exports grew by 1.5% while imports decreased by 0.4%.

Nominal GDP grew by 1.2%, or at an annualized rate of 4.7%, in the last quarter of 2022.

In 2022 as a whole, the Japanese economy expanded by 1.0% in real terms, following a 1.6% rise in 2021.

Labour Force Survey Monthly Results¹

The employment situation is gradually picking up.

(1) Employment

The number of employed persons in January 2023 was 66.89 million, an increase of 430,000 over the same month the previous year. By gender, this included 36.86 million men, up 60,000, and 30.03 million women, up 380,000 from the previous year, respectively.

(2) Unemployment

The number of unemployed persons in January 2023 was 1.64 million, a decrease of 210,000 from the same month in the previous year, for the nineteenth straight monthly decline. The seasonally adjusted unemployment rate in January was 2.4%, down 0.1 from the previous month, the first improvement in two months and lowest since the pre-pandemic level of February 2020. The unemployment rate for men was 2.6%, down 0.1 from the previous month, and 2.2% for women, unchanged from the previous month.

(3) Job Availability

Japan’s job availability in January stood at 1.35, down 0.01 from the previous month, for the first time in over two years, as more people sought jobs with better working conditions amid an economic recovery from the COVID-19 pandemic. This ratio means there were 135 job openings for every 100 job seekers. The ratio of regular employee job offers to applicants was 1.03, down 0.01 from the previous month.

The ratio of new job offers to applicants, a leading indicator for the labour market, was 2.38, unchanged from the previous month. Among the industries, accommodation and restaurant services saw the sharpest rise in job offers at 27.0% from a year earlier on the back of recovering tourism demand.

Industrial Production ²

Industrial output in January decreased 4.6% from the previous month for the first decline in three months due to parts shortages and the halting of factory operations amid heavy snow and weakening demand amid concern over a global economic slowdown. While production, shipments, and inventories decreased, inventory ratio increased.
The industries that mainly contributed to the decrease were as follows: (1) motor vehicles; (2) production machinery; and (3) electronic parts and devices, in that order.
According to the Survey of Production Forecasts in Manufacturing, production was expected to increase 8% in February and increase 0.7% in March.

Family Income and Expenditure Survey ³

Household spending falls 0.3%, 3rd consecutive decline

(1) Expenditure of Households of Two Persons or More

Average monthly consumption expenditure of households of two or more persons in January was 301,646 yen, up 4.8% in nominal terms but down 0.3% in real terms from the previous year, marking the third consecutive month of decline. By component, spending on culture & recreation rose 18.6% with more people going out during the New Year holidays. Food expenditure fell 0.5%, including a 16.4 % plunge in purchases of fresh seafood, affected by rising prices as well as people spending more on eating out, but purchases of household items fell 9.1%, as rising prices dented demand for washing machines and other electrical goods in real terms from a year earlier.

(2) Income and Expenditures for Workers’ Households

Average monthly income per household stood at 495,706 yen, up 3.3% in nominal terms but down 1.7% in real terms from the previous year. The average level of consumption expenditure was 331,130 yen per month, up 5.3% in nominal terms and up 0.2% in real terms year-on-year.

Consumer Prices ⁴

Consumer prices rise 4.0%, the highest since 1981

The consumer price index (CPI) in January was 104.7 (2020 = 100), up 4.3% over the previous year and up 0.5% over the previous month, rising at the fastest pace since September 1981 on higher energy and food prices. Core inflation (CPI less food and energy) was up 3.2% over the previous year, marking the tenth straight month of increase. Energy prices surged 14.6% from a year earlier. Gas and electricity bills saw marked gains of 24.3% and 20.2%, respectively. Food prices, excluding fresh food items, rose 7.4%, marking the sharpest rise since February 1981. Due to the government’s decision to subsidize utility bills for consumers, electricity and gas prices are expected to be lower in February.

1. Source: Labour Force Survey Monthly Results (Statistics Bureau of Japan)
   (https://www.stat.go.jp/english/data/roudou/results/month/index.html)
2. Source: Indices of Industrial Production (Ministry of Economy, Trade and Industry)
   (https://www.meti.go.jp/english/statistics/tyo/iip/index.html)
3. Source: Summary of the Latest Month on Family Income and Expenditure Survey (Statistics Bureau of Japan)
   (https://www.stat.go.jp/english/data/kakei/156.html)
4. Source: Consumer Price Index (Statistics Bureau of Japan)
   (https://www.stat.go.jp/english/data/cpi/1581-z.html)