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Abenomics In Review

  • Written by Syndicated Publisher No Comments Comments
    May 5, 2014

    Abenomics said Japanese stimulus efforts would offset tax hikes. I disagreed. Although one month is not proof, Markit reports Japanese Output and New Orders Decline For First Time in 14 Months Following Tax Hike

     Key points:

    Output falls at fastest pace since December 2012
    New orders also down; exports decline slightly
    Rate of job creation accelerates to highest since February 2007

    Summary: Japanese manufacturing firms saw a decline in output for the first time in 14 months in April. Alongside this fall in output was a deterioration in new orders which also decreased for the first time in 14 months. In both cases, firms linked the reductions to the rise in the sales tax.

    The headline seasonally adjusted Markit/JMMA Purchasing Managers’ Index™ (PMI™ ) – a composite indicator designed to provide a single – figure snapshot of the performance of the manufacturing economy – posted at 49.4 in April, down from 53.9 in March. This was the first time in 14 months that the Japanese manufacturing sector saw a deterioration in business conditions. Output fell to the greatest extent seen since December 2012.

    The main contributor according to anecdotal evidence was a decline in demand. Indeed, similar to output, new orders decreased, with evidence suggesting the increase in the sales tax was the main factor behind lower new orders, as clients had brought forward purchases in March to avoid paying additional costs the following month.

    Japan Manufacturing PMI

    Abenomics in Review 

    One month does not present a complete picture. However, Abenomics has so far resulted in a declining Japanese balance of trade, inflation (foolishly wanted), little to no increase in exports, and soaring import costs (especially food and energy).

    For those results, many leading world economists think prime minister Shinzo Abe is a hero. In contrast, I think he is a fool.
    Read more at http://globaleconomicanalysis.blogspot.com/2014/04/japan-output-and-new-orders-decline-at.html#B0dcqbThMVisJgvY.99

    Images: Flickr (licence attribution)

    About The Author

    Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.  Visit Sitka Pacific’s Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

    You are currently viewing my global economics blog which typically has commentary every day of the week. I am also a contributing “professor” on Minyanville, a community site focused on economic and financial education.  Every Thursday I do a podcast on HoweStreet and on an ad hoc basis contribute to many other sites.

    When not writing about stocks or the economy I spend a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com.
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