Japan FRIDAY

Akira Ito
29 Aug, 2025
Tokyo

Japan's benchmark indexes closed down and extended weekly losses after key economic data failed to spark investor enthusiasm. 

The Nikkei 225 Stock Average decreased 0.4%, and the broader Topix index declined 0.5%, after retail sales and industrial output data fell short of market expectations. 

For the week, the Nikkei 225 Stock Average 0.6%, and the Topix fell 1.1% amid looming U.S. trade policy uncertainty and Japan's rate path worries. 

About 40% of the listed companies in Japan rely on exports for sales growth and business expansion. 

On the economic front, July's retail sales and industrial production fell short of market expectations, putting additional pressure on market sentiment.  

 

July's Retail Sales Growth Underwhelmed Investors 

Retail sales increased seasonally adjusted 0.3% in July from the previous month, the Ministry of Economy, Trade, and Industry reported on Friday. 

However, retail sales on an annual basis fell 1.6% after gaining 0.9% in the previous month.  

Commercial sales fell 0.3% on month and rose 0.4% on year to 54.3 trillion yen, while wholesale sales decreased 0.6% on month and edged up 0.6% on year to 40.97 trillion yen.

 

Weak Auto Production Dragged Down Industrial Production In July

Japan's industrial production struggled amid ongoing U.S. trade policy uncertainty, according to the latest data from the Ministry of Economy, Trade, and Industry. 

Industrial production declined 1.6% on month and fell 0.9% on an annual basis in July, and the ministry reiterated that the production growth is likely to remain volatile. 

Output in nine sectors declined and automobile vehicle production fell 6.7% amid weakness in exports to the U.S., Australia, and China. 

In addition, machinery production fell 6.2%, driven by a decline in demand for semiconductor manufacturing equipment from China.  

Six sectors showed an increase in production, and electrical machinery production advanced 1.8% because of strong demand for desktop and laptop computing devices.   

Shipments declined 2.5% on month and 2.1% on year, while inventories rose 0.8% on month but fell 2.5% on year. 

The inventory ratio was up 0.4% on month and 1.4% on year.

 

Japan's Jobless Rate Dropped to Five-Year Low 

Japan's jobless rate improved to 2.3% in July from 2.5% in the previous month, the Ministry of Economy, Trade, and Industry reported Friday. 

The jobless rate dropped to the lowest level since December 2019, as fewer employees looked to change jobs in the tight labor market. 

The unemployed people declined 4.7% to 1.64 million, and those with jobs fell 10,000 to a seasonally adjusted 68.31 million. 

The jobless rate improved  to the level last seen before the start of the COVID-19 pandemic, as large companies revved up hiring amid a surge in exports over the last two years. 

A separate report showed that the job availability ratio was unchanged from June at 1.22, indicating there were 122 jobs available for every 100 applicants. 

 

Consumer Price Inflation Slowed After Energy Subsidies Resumed

Tokyo area consumer price inflation slowed in August, according to the preliminary data released by the ministry of internal affairs. 

Overall inflation slowed to 2.6% from 2.9% in July, mainly because of the resumption of government subsidies on household natural gas and electricity charges. 

Core inflation, which excludes volatile fresh food prices, slowed to 2.5% from 2.9% in the previous month. 

However, fresh food prices rose 7.4% in August, and advanced faster than 7% rate for the third consecutive month.  

Chocolate prices soared 56%, coffee beans prices increased 46%, and rice price increase weakened to a 68% rise.  

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.4% to 42,678.77, and the broader Topix fell 0.5% to 3,075.50. 

Semiconductor equipment makers declined despite strong quarterly results from Nvidia. 

The U.S.-based AI chip leader reported a surge in revenue and earnings in the fiscal second quarter, but said that trade restrictions in the U.S. and China blocked $4 billion of H20 chip sales to China. 

Tokyo Electron decreased 0.4% to ¥20,665.0, Advantest Corp. edged up 1% to ¥11,675.0, and Disco Corp. gained 0.01% to ¥41,350.0. 

Dentsu Group Inc. jumped 6% to ¥2,924.0 amid a report that the company is looking to sell its international operations. 

The company has reached out to financial firms and competitors to gauge the level of interest, according to The Financial Times. 

Ryohin Keikaku declined 3.2% to ¥3,188.0, Sony Group Corp. dropped 1.4% to ¥4,083.0, and Canon Inc. fell 0.3% to ¥4,350.0.