JPY: Labor market remains tight, inflation remains elusive - BBH

Analysts at BBH note that the Japan reported November inflation and employment figures and the key takeaway is that although the labor market remains tight, inflation remains elusive. 

Key Quotes

“The jobless rate ticked up to the still-enviable 3.1%.  The job-to-applicant ratio stands a 1.41.  However, the key measure of inflation, CPI minus fresh food, remained at minus 0.4%, which is what it has averaged this year.   Excluding both food and energy, Japan's CPI stood at 0.1% in November down from 0.2% in October.  The Tokyo data, which is reported with less of a lag, gives no reason to be optimistic.  The  December headline CPI fell to zero from 0.5%, and the core rate, which excludes fresh food, fell to minus 0.6% from minus 0.4%.”

“Moreover, the full employment is not only failing to boost prices, but it is not boosting consumption.  Overall household spending slumped to minus 1.5% in November from minus 0.4% in October.  The Bloomberg median had expected a rise to 0.1%.   Japan also reported weak housing starts and construction orders.  Forecasts for Q4 GDP will likely be revised lower.  Japan will report industrial output and retail sales tomorrow.”