Japanese consumer confidence missed expectations

Chris Scicluna
Emily Nicol

Japan’s consumer confidence unchanged as a greater share of households expect prices to rise
After rising in October to its highest level since April 2019 as pandemic-related restrictions were relaxed, Japan’s headline consumer confidence indicator took a somewhat surprising step sideways in November (39.2) to remain more than 2½pts below the pre-pandemic five-year average. Within the detail, despite the recent decline in payrolls, households were again more upbeat about employment prospects, with the relevant index rising to its highest since May 2019, while their confidence about income growth was the highest since the onset of the pandemic. But in spite of the marked drop in the number of coronavirus cases, consumers were on balance less upbeat about their overall livelihoods, and as a result were seemingly the least willing to buy durable goods since June. With this survey having been conducted in the middle of November and so well ahead of the news regarding the Omicron variant, we might well expect to see a step back in confidence this month.

Meanwhile, the survey’s price expectations gauges suggested that on balance prices are expected to rise at a faster pace over the year ahead after this year’s absence of inflation. Indeed, the share of households expecting prices to fall dropped to just 2.9% in November, the lowest since 2008, while just 8% expected prices to be unchanged, the lowest for more than two years. And so the share of those expecting prices to rise rose 2.1ppts to 86.7%, the most since 2015. Of course, household inflation expectations often bear little resemblance to reality, and the upwards shift this month solely reflected an increase in the share (circa 30%) who expect prices to rise by more than 5%Y/Y. The share of those who expected inflation between 2-5% was unchanged at 35%, while those expecting a rise of less than 2% fell to 22%.

Euro area joblessness expected to fall further; producer prices to maintain their upwards trend
This morning brings euro area unemployment numbers for October. Consistent with numbers out of Germany and Spain, these are expected to show a further decline in joblessness to leave the unemployment rate edging down for the sixth successive month, by 0.1ppt to 7.3%, which would be the lowest level since March 2020. This morning’s Spanish labour market numbers for November were also encouraging, reporting a further drop in unemployment by (an unadjusted) 74.4k, the largest fall in any November on the series and marking the lowest month of unemployment (3.18mn) in any November since 2008.

Meanwhile, after the flash euro area CPI estimate saw consumer price inflation jump to a 30-year high, the latest euro area producer price inflation data are expected to confirm intensified price pressures at the factory gate. The headline PPI rate is expected to rise 3.0ppts to 19%Y/Y in October. Beyond the data, dovish ECB Executive Board member Panetta will be chairing a panel at the ECB’s conference on fiscal policy and EMU governance.

A quiet day in the UK with just the BoE’s Decision Maker Panel data due
A quiet day for UK economic releases, with just the BoE due to publish its latest Decision Maker Panel data, which provides a view of developments in the economy from UK businesses.

US weekly jobless claims and Challenger job cuts data due
Ahead of tomorrow’s payrolls report it will a quiet day for US releases, with just the weekly jobless claims numbers and Challenger job cuts data due. In terms of Fed-speak, Governors Mary Daly and Thomas Barkin will attend a virtual fireside with the Peterson Institute, while Raphael Bostic is due to speak on the high cost of housing and Randal Quarles will share his departing thoughts before he steps down at the end of the month. And attention will remain on Congress, as Democrats and Republicans continue to struggle to pass a stopgap funding bill before Friday’s deadline, risking a (likely brief) government shutdown. 

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