Data for March show the big hit that the Japanese economy suffered as a result of the earthquake. AFP/CNA reports:
Japan's factory output took a record tumble in March after a devastating earthquake and tsunami forced the nation's biggest companies to shutter plants and crippled supply chains, data showed Thursday.
A 15.3 per cent dive in Japan's industrial production month-on-month was the sharpest since records began in 1953, the government said...
Japanese household spending plunged 8.5 per cent in March from a year earlier in the biggest drop since records began in 1964...
The core consumer price index fell 0.1 per cent in March, matching market expectations as Japan remained mired in deflation for a 25th month in a row.
However core prices in April in Tokyo -- seen as a leading indicator for the nation -- rose 0.2 per cent, the data showed.
The unemployment rate stood at 4.6 per cent in March, unchanged from a month earlier, but figures from northeastern Japan, hit by the March 11 disaster, were excluded, the government said Thursday.
Not surprisingly, the Bank of Japan has lowered its growth forecast for the economy for the current fiscal year. AFP/CNA reports:
The Bank of Japan on Thursday cut its growth forecast for this fiscal year to 0.6 per cent from its earlier 1.6 per cent projection, citing the impact of the March 11 quake and tsunami...
However, the bank raised its real GDP growth outlook for fiscal 2012 to 2.9 per cent growth from its earlier 2.0 per cent forecast, citing the stimulus it expects from vast reconstruction efforts in the disaster-hit northeast...
The central bank also predicted an end to deflation, which has long hampered growth in the world's third largest economy, this year.
For both fiscal 2011, which started on April 1, and next year, it predicted a 0.7 per cent rise in the core consumer price index. Its earlier predictions were for 0.3 per cent this year and 0.6 per cent in fiscal 2012.
Earlier in the day the BoJ left its key interest rate unchanged at between zero and 0.1 per cent to free up credit and stimulate the economy.
AFP/CNA also reports the latest fiscal action from the Japanese government.
The Japanese government submitted a US$49 billion budget to parliament on Thursday to help fund reconstruction after a deadly earthquake and tsunami...
The four trillion yen (US$49 billion) extra budget, announced last week, would cover restoration work such as clearing massive amounts of rubble and building temporary housing for the thousands of people who lost their homes.
Meanwhile, the US economy already appears to have cooled in the first quarter. From Bloomberg:
The U.S. economy slowed more than forecast in the first quarter as government spending declined by the most since 1983 and household purchases cooled.
Gross domestic product rose at a 1.8 percent annual rate from January through March after a 3.1 percent pace in the final three months of 2010, the Commerce Department said today in Washington. Economists projected 2 percent growth, according to the median estimate in a Bloomberg News survey. Another report showed rising gasoline prices depressed consumer confidence last week.
Not that investors seem to care much.
Stocks rose, sending the Standard & Poor’s 500 Index to the highest levels since 2008, as better-than-estimated corporate earnings tempered concern over slowing growth. The S&P 500 climbed 0.4 percent to 1,360.48 at 4 p.m. in New York.
There was some good news for the housing market though.
A report from the National Association of Realtors today showed an increase in the number of Americans signing contracts to buy previously owned homes. The index of pending home resales climbed 5.1 percent after a revised 0.7 percent increase the prior month, the group said.