Wholesale prices in April in Japan dropped 3.8% versus the same month last year, the steepest prices drop in 22 years, suggesting that Japan may now be entering another deflationary spiral reminiscent of the 1990s. Commentators attribute the dip to falling energy and materials costs, which could be seen as positive news for manufacturers. However figures also show that for the first time in 18 months, consumer prices also deflated in March. Falling prices in the shops signals shrinking consumer spend and narrowing profit margins.
Positive signs for industry
In contrast, there are signs that manufacturing industry maybe nearing the bottom of the slump. Core private-sector machinery orders are reported to have fallen by 1.3% in March compared with February – much less than expected. As we noted in April, machinery shipments are already well-ahead of forecasts following better than expected results released in February.
(Sources: TT commentary from google.com, May 15, 2009; Kyodo World News Service)
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