Weakness in Auto Production and Housing Starts Persist in Japan

Hiruki Nakamura
27 Feb, 2015
New York City

Nikkei in Japan extended to another 15-year high as investors digested several economic reports. Auto production declined for the seventh month in a row and housing starts fell for the eleventh month. Also, the latest measure of inflation showed a decline and jobless rate was unchanged.

[R]4:30 PM Tokyo – Nikkei in Japan extended to another 15-year high as investors digested several economic reports. Auto production declined for the seventh month in a row and housing starts fell for the eleventh month. Also, the latest measure of inflation showed a decline and jobless rate was unchanged.[/R]

Investors focused on the barrage of domestic economic news and auto production declined for the seventh month in a row and housing starts declined for the eleventh month in a row.

In addition, the latest measure of jobless rate was nearly unchanged and critically watched inflation index declined in January despite the efforts from the Bank of Japan to revive inflation.

Seasonally adjusted unemployment rate in January climbed 3.6% and unchanged from December. The number of unemployed persons in January was 2.31 million, a decline of 70,000 or 2.9% from a year ago month, the Ministry of Internal Affairs and Communications reported today.

In a separate report, the ministry said consumer price index in January declined to 103.1, 0.2% decrease from the previous month but jumped 2.4% from a year ago month.

The same department reported average household spending in January dropped 5.1% to 289,847 yen followed by 3.4% contracted in December.

The department added average monthly income per household slipped 2.3% to 440,226 yen and monthly consumption expenditures declined 4.3% to 320,674 yen from a year ago month.

Total value of retail sales in January dropped 2% to 11.49 trillion yen followed by 0.1% increase in December. On a seasonally adjusted retail sales slipped 1.3%, the Ministry of Economy, Trade and Industry said.

Industrial production in January climbed 4% following the 0.8% increase in December but declined 2.6% from a year ago month, the Ministry of Economy, Trade and Industry said today.

Seasonally adjusted shipments in January increased 5.8% and seasonally adjusted inventories in the month decreased 0.6% from December.

Automobile production in January declined 9.7% to 777,656 units from 860,854 units a year ago month, the Japan Automobile Manufactures Association announced.

The monthly production declined for the seventh month in a row.

Motorcycle production in January plunged 13.1% to 49,675 units from 57,176 units a year ago period.

The department added January passenger cars sales in domestic market tumbled 20.7% to 344,040 units and sales of trucks in the month dropped 8.6% to 56,590 units.

Total vehicles sales in the month declined 19.1% to 401,366 units.

Total export in January climbed 4.6% to 341,872 units.

Housing starts in January declined 13% followed by 14.7% plunge in December, the Ministry of Land, Infrastructure, Transport and Tourism said.

Housing starts declined for the eleventh month in a row.

The Nikkei 225 Stock Average edged up 12.15 to 18,797.94 and the broader Topix index rose 2.17 to 1,523.85.

For the week Nikkei 225 climbed 2.5% and for the month soared 5.8%.

The yen traded eased to 119.25 against one dollar.

Stocks in Review

Nisshinbo Holdings Inc fell 0.5% to 1,216 yen after the Nikkei news reported conglomerate plans to acquire Tokyoshirts Group, the largest men''s shirts maker and retailer for several billion yen.

The transaction is expected to close in mid-May.

Nexon Co Ltd surged 9.6% to 1.238 yen after the online game developer plans to buy back as much as 2% or up to 10 billion yen of its stock.

Resona Holdings Inc slid 0.06% to 671.60 yen after the financial service provider said it will pay back the remaining 128 billion yen or $1.1 billion to the government after its shareholders meeting scheduled in June.

Separately, Resona revised yearly dividend to 17 yen for the fiscal year ending in March from the estimate of 15 yen announced in January.

Yamaha Motor Co., Ltd gained 1.9% to 2,972 yen after the president Hiroyuki Yanagi said that the company plans to double operating profit margin from its motorcycle business by the end of 2018 on the 20% decline in costs.

Hiroyuki said the company intends to launch small cars in Europe as early as 2019 and also plans to build passenger vehicle plants in Europe in 2020.