Japan: Fifth consecutive quarterly expansion,  longest stretch since 2006 - Wells Fargo

Earlier today, Q1GDP data from Japan was released. A better-than-expected print for first quarter growth extended the longest winning streak since 2006, although still-soft CPI likely means continued accommodation from the Bank of Japan, explained analysts from Well Fargo. 

Key Quotes: 

“The Japanese economy expanded at an annualized pace of 2.2 percent in the first quarter. Not only was that the fastest pace of growth since the first quarter of last year, it also marks the fifth consecutive quarterly expansion—the longest stretch of uninterrupted growth in Japan since 2006.”

“The growth rate came from broadly based support. The largest overall positive contributor came from consumer spending which grew at an annualized rate of 1.4 percent, enough to add 0.8 percentage points to the overall growth rate.”

“Consumers are not the only ones feeling a bit more confident. The Tankan survey of large manufacturers rose in the first quarter to its fastest pace of expansion since 2015. That confidence has manifested itself in today’s GDP report in the form of increased business spending.”

“The risk-off sentiment in recent days has pushed the yen higher as periods of pronounced market risk often will, but our base case scenario is for continued yen weakness over time. Despite this better-than-expected GDP report, inflation moved further away from the central bank’s target in March suggesting a continued dovish policy bias from the Bank of Japan.”