Japan Economic Data: BoJ, Tankan Survey & Japanese Macro Indicators

Why Japan Data Matters

Japan is the world's 4th largest economy and unique for:

• Decades of deflation (now ending?)
• Yield curve control (YCC)
• Massive central bank balance sheet
• Aging demographics
• Yen as funding currency

Understanding Japan = understanding global macro.

Bank of Japan (BoJ) Data

Policy Tools

Policy Rate:

• Currently negative (-0.1%) but potentially changing
• Complementary deposit facility rate

Yield Curve Control (YCC):

• 10-year JGB target (~0%, with bands)
• Unique policy tool globally
• Widening bands = stealth tightening

Asset Purchases:

• JGBs (owns ~50% of market)
• ETFs (massive equity holdings)
• REITs, corporate bonds

BoJ Balance Sheet

IQ Score: 95

Track:

• Total assets
• JGB holdings
• ETF holdings
• Reserve balances

BoJ Outlook Reports

Quarterly projections:

• GDP growth
• Core CPI
• Risk assessment

Tankan Survey

What Is Tankan?

IQ Score: 96

The most important Japanese business survey.

Published: Quarterly (April, July, October, December)

Coverage: ~10,000 firms

Key Components

Diffusion Index (DI):

% favorable - % unfavorable

Business Conditions DI:

• Large enterprises (manufacturing & non-manufacturing)
• Medium enterprises
• Small enterprises

Interpretation:

Other Tankan Metrics

• Capacity utilization
• Employment conditions
• Capital spending plans
• Price expectations

Why Tankan Is Critical

• Captures mood of Japanese business
• Forward-looking components
• BoJ watches closely
• Market-moving release

GDP and Growth Data

Cabinet Office GDP

IQ Score: 94

Release: ~6 weeks after quarter-end (preliminary)

Components:

• Private consumption
• Business investment
• Government spending
• Net exports
• Inventories

GDP Peculiarities

• Quarterly GDP often negative
• Annual growth very low (~1%)
• Potential growth: ~0.5%

Monthly Activity Indicators

Industrial Production:

• METI release
• Leading indicator
• Very volatile

Retail Sales:

• Cabinet Office
• Consumer health

Machinery Orders:

• Core orders (ex-ships, electric power)
• Leading indicator for capex

Inflation Data

Core CPI (Ex-Fresh Food)

IQ Score: 95

BoJ's preferred measure.

History:

• Decades of deflation
• 2% target elusive until 2022
• Now above target

CPI Variants

Inflation Expectations

BoJ surveys:

• Household expectations
• Business expectations
• Market breakevens (limited)

Labor Market Data

Unemployment Rate

IQ Score: 93

Very low (~2.5%) but structural issues:

• Lifetime employment tradition
• Labor hoarding
• Discouraged workers

Jobs-to-Applicants Ratio

Better indicator of labor market tightness.

>1.0 = More jobs than applicants

Labor Force Participation

Watch for:

• Women's participation (Womenomics)
• Elderly participation (high and rising)

Trade and Current Account

Trade Balance

IQ Score: 94

Japan has shifted:

• Historically: Trade surplus
• Recent: Often deficit (energy imports)
• Energy prices critical

Current Account

Still in surplus due to:

• Primary income (investment returns)
• Services (tourism)

Yen Sensitivity

Trade data affects yen:

• Deficit = yen-negative
• Surplus = yen-positive

Data Sources

Official Sources

Statistics Bureau of Japan:

• CPI data
• Labor force
• Household survey
• IQ Score: 93

Cabinet Office:

• GDP
• Business cycle
• Economic outlook

METI:

• Industrial production
• Trade statistics
• IQ Score: 94

Bank of Japan:

• Monetary data
• Financial statistics
• Tankan

International Sources

FRED:

• Key Japan series
• Exchange rates
• Some macro data

IMF:

• Japan in WEO
• Article IV reports

OECD:

• Standardized data
• Japan outlook

Japan-Specific Indicators

Consumer Confidence (ESRI)

Monthly survey of households.

• Overall index
• Livelihoods sub-index
• Employment sub-index

Tertiary Industry Activity

Services sector output.

• Monthly frequency
• Important given services share

Household Spending

Monthly survey data.

• Volatile
• Shows consumer behavior

Building a Japan Dashboard

Quarterly

• Tankan (DI and components)

• GDP (advance and revised)

• BoJ meeting outcomes

Monthly

• CPI (all variants)

• Industrial production

• Trade balance

• Retail sales

• Machinery orders

Weekly/Daily

• Yen (USDJPY)

• JGB yields (10-year)

• Nikkei 225

Trading Japanese Data

Market-Moving Releases

• Tankan - Biggest quarterly

• GDP - Growth health

• CPI - BoJ policy

• BoJ decisions - Policy shifts

Yen Reactions

• Strong data = yen strength (usually)
• BoJ hawkish = yen strength
• Risk-off = yen strength (safe haven)

Night Session Considerations

• Japan data releases during Asian hours
• Currency moves overnight (for US traders)
• Futures markets available

Pro Tips

• Tankan is king: Most important survey

• YCC changes matter: Policy shift signals

• Demographics dominant: Long-term growth constrained

• Yen drives equities: Weak yen = strong Nikkei

• BoJ is patient: Slower to act than Fed

• Deflation mentality: Hard to change expectations

Explore Japan economic data →