The Bank of Japan on Thursday upgraded its opinion of the economy for the first time since July, describing it as “recovering moderately” on solid consumer spending and recovering corporate spending amid improvements in employment and nonbase pay.
The BOJ’s nine-member Policy Board decided unanimously to leave its radical quantitative easing policy launched in April in place. The program, the heart of the deflation-fighting program dubbed “Abenomics,” is aimed at doubling the nation’s monetary base and purchasing a wide range of government bonds to stoke 2 percent inflation in two years.
Looking ahead, the BOJ said the economy “is expected to continue a moderate recovery” as consumer prices gradually rise from year to year, according to a statement issued after the end of its two-day policy meeting.
Government data earlier this week said capital spending in the April-June quarter had grown for the first time in three quarters, thanks to a weakened yen driving up stock prices.
As for worker incomes, the average salary paid in July rose for the second consecutive month, if summer bonuses and paid overtime are included, it said.
Basic salaries, themselves, however, fell for the 14th month straight.
As for prices, the government said last week that consumer prices rose 0.7 percent in July from the previous year, driven up mainly by volatile energy, most of which is imported. It was the highest rise in the CPI since November 2008. The more accurate and widely used core-core CPI figure — which excludes both energy and food prices to provide a more informed description of price trends — isn’t usually trumpeted by Japan’s mainstream media or the government. Without energy, prices fell.
On the job front, signs of improvement emerged in July as job opportunities rose to the best level in more than five years, denting the unemployment rate.
“Business fixed investment is starting to pick up as corporate profits have improved,” the BOJ said. “Private consumption has remained resilient, with some improvement observed in the employment and income situations.”
The BOJ’s assessments of the economy improved from January to July before leveling out in August, when it was described as “starting to recover moderately.” The central bank also said there “remains a high degree of uncertainty,” given developments in Europe’s debt problem, emerging economies, commodity-exporting economies and the pace of U.S. economic recovery.