Summary: The economy is currently deteriorating but likely to level off
▶  In August, production shrank and the rush demand before the tax hike was still limited. Large retailers’ revenues increased, but the number of new housing starts declined.
▶  Nominal wages in Osaka, Kyoto and Hyogo prefectures increased, but real wages kept declining.
▶  In September, Kansai logged a trade surplus. Both exports and imports expanded, but that was mainly due to the rebound from last year’s typhoon-induced slump in trade.
▶  The huge YoY increase in the number of international arrivals at Kansai International Airport in September can also be attributed to last year’s typhoon.
▶  The value of public works contracts declined, but an upward trend is expected in the areas affected by the natural disasters in October.
▶  China’s Q3 GDP expanded an annualized +6.0%, an all-time low. Consumer spending remained unchanged. Industrial production accelerated, but fixed capital investment decelerated. Prospects remain unclear.

Summary: Further economic deterioration in sight
▶ Production in July expanded MoM for the first time in two months.
▶ Although Kansai logged a trade surplus in August, the total trade volume kept declining. The slowdown of the Chinese economy had a major negative impact. In contrast, the impact of trade tensions with Korea remains limited to individual firms.
▶ The Economy Watchers’ Diffusion Index (DI) in August improved MoM for the first time in four months.
▶ Nominal wages in June increased in Shiga, Hyogo and Kyoto, but declined in Nara and Wakayama.
▶ Sales by large retailers in July fell below last year’s level for the first time in three months.
▶ Housing construction expanded due to rush demand, but the increase was modest compared to the one seen before the previous tax hike in 2014.
▶ The effective job offers-to-applicants ratio in July declined slightly. The unemployment rate declined to 2.4%.
▶ July was the 17th month of uninterrupted YoY growth in public construction works.
▶ The number of international arrivals at Kansai International Airport in August grew YoY for the 11th consecutive month. However, growth decelerated to +4.9% (from +15.5% in July) due to the deterioration in Korea-Japan relations.
▶ China’s economic slowdown become more evident in August. Car sales kept declining (-8.1% YoY), and investment in the industrial sector decelerated significantly. China’s total trade volume shrank for the fourth consecutive month.

Summary: Further economic deterioration in sight

･ Production in June shrank MoM for the first time in three months.
･ Although Kansai logged a trade surplus in July, the total amount of trade declined YoY for the eighth consecutive month. The impact of the trade tensions with Korea are limited to individual firms rather than industries.
･ The Economy Watchers’ Diffusion Index (DI) in July deteriorated MoM for the third consecutive month.
･ Nominal wages in May remained unchanged, but real wages decreased YoY for the third consecutive month.
･ Sales by large retailers in June exceeded last year’s level for the second month in a row.
･ The number of new housing starts in June contracted by -3.6% YoY, decreasing for the third consecutive month.
･ Both the effective job offers-to-applicants ratio and the unemployment declined slightly in June.
･ June was the 16th month of uninterrupted YoY growth in construction works.
･ The number of international arrivals at Kansai International Airport in June grew YoY for the tenth consecutive month.
･ China’s Purchasing Managers’ Index (PMI) in July improved slightly, but it remained below 50 for the third month in a row.

Summary: Further economic deterioration in sight

･ Production in May expanded MoM for the second month in a row.
･ Although Kansai registered a trade surplus for the first time in two months in June, both exports and imports shrank YoY.
･ The Economy Watchers’ Diffusion Index (DI)  in June deteriorated MoM for the second consecutive month.
･ Both nominal and real wages in April decreased YoY for the second consecutive month.
･ Sales by large retailers in May expanded YoY for the first time in two months.
･ The number of new housing starts in May plummeted sharply (-27.5% YoY), decreasing for the second consecutive month.
･ Although the effective job offers-to-applicants ratio in May declined slightly, the absolute numbers of both job offers and applicants increased. The unemployment rate remained unchanged.
･ Construction works in May expanded YoY for the 15th month in a row. However, public works contracts declined.
･ The number of international arrivals at Kansai International Airport in June grew YoY for the ninth month in a row.
･ China’s Q2 real GDP expanded +6.2% YoY, the slowest growth rate since 1992.

Summary: Current economic deterioration expected to persist

• Production in April expanded MoM for the first time in six months, but output was -0.5% lower than the Q1 average.
• Kansai registered a trade deficit in May for the first time in four months. Both exports and imports shrank YoY.
• The Economy Watchers’ Diffusion Index (DI) in May deteriorated MoM for the first time in two months.
• Both nominal and real wages in March decreased YoY for the first time in three months.
• Sales by large retailers in April shrank YoY for the first time in two months.
• The number of new housing starts in April decreased YoY for the first time in two months.
• The job offers-to-applicants ratio in April increased slightly. The unemployment rate remained unchanged.
• Construction works in April expanded for the 14th consecutive month.
• The number of international arrivals at Kansai International Airport in May grew YoY for the eighth month in a row.
• China’s Purchasing Managers’ Index (PMI) in May deteriorated for the second consecutive month.

Summary: Economy remains sluggish with signs of potential deterioration

• Production in March shrank MoM for the first time in two months.
• The April trade balance remained positive for the third month in a row, but it shrank YoY.
• The Economy Watchers’ DI in March improved MoM for the first time in two months.
• Real wages in February increased YoY for the second month in a row.
• Sales by large retailers in March expanded for the first time in five months.
• New housing starts in March increased YoY for the first time in two months.
• The effective job offers-to-applicants ratio in March remained unchanged.
• March was the 13th month of uninterrupted YoY growth in construction.
• International arrivals at KIX in April grew YoY for the seventh month in a row.
• China’s PMI in April deteriorated for the first time in two months.