Tuesday, 5 December 2006

Japanese capital spending slows

Yesterday's data from Japan raised more doubts over whether the BoJ will raise rates soon. From Reuters:

Growth in Japanese firms' capital spending slowed in the July-September quarter, data showed on Monday, pointing to a downward revision in gross domestic product figures due later in the week...

Spending on plant and equipment was up 12.0 percent in the three months to September compared with the same quarter last year, the corporate survey by the Ministry of Finance survey showed...

On a seasonally adjusted basis and excluding software investment, capital spending rose just 0.1 percent in July-September from the preceding quarter, when it grew 5.2 percent...

The MOF's latest survey also showed recurring profits rose 15.5 percent in July-September from the same quarter a year earlier to 13.39 trillion yen ($116 billion).

The pace of rise picked up from the 10.1 percent increase logged in April-June.

Separate data showed Japanese wage earners' total cash earnings were flat in October from a year earlier.

Overtime pay, seen as a barometer of the strength in economic activity, rose 1.1 percent.

In the meantime, though, Japan's monetary base continues to fall. From Kyodo/Yahoo! News:

Japan's monetary base posted its biggest fall on record -- 22.3 percent -- in November from a year earlier, as the balance of current account deposits held by financial institutions at the Bank of Japan dropped sharply, the central bank said Monday.

But perhaps it is already too late to tighten. There may already be a global inventory glut.

Just-in-time inventories are turning into just-too-much at companies around the world.

From Dodge Ram pickup trucks to Sanyo mobile telephones, unsold goods are piling up around the world. That may become a drag on global economic growth as companies idle workers and production lines to clear out the excess.

Factory inventories worldwide rose faster than sales last quarter for the first time since 2001, according to economists at UBS AG in London. Behind the build-up: an unexpected slowdown in demand, especially in the U.S., brought on by the mid-year surge in energy prices and a housing slump.

Apart from Japan, the news flow elsewhere yesterday also generally pointed to slower economic growth.

U.S. Oct pending home sales index falls 1.7 pct

Industrial producer prices stable in euro area

UK construction activity slows in Nov-CIPS

UK Q4 factory orders robust, outlook less rosy-EEF

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