Latest report from Japanese Ministry of Economy, shows dwindling state of Japanese domestic services sector, which in turn poses doubts on Bank of Japan’s (BOJ) asset purchase program’s ability to boost domestic demand.
BOJ need to boost domestic demand if it wants to generate inflation and sustain it.
- Wholesale and retail trade that includes Building material, minerals, metals, food, beverages and motor vehicles dropped by 2.5% in March from February.
- Automobile maintenance services dropped by 2.5%.
- Civil engineering, architectural services dropped by 2.7%.
- Electricity, Gas, Heat and Water services dropped by -1.2%.
- Accommodation eating and drinking services trade registered drop of -0.7%.
- Real Estate, Goods rental, leasing, Transport and postal services dropped by -0.2%
- Finance and insurance services registered drop of -0.1%.
Drop in services sector led to the drop of tertiary index which is a measure for domestic demand for services dropped by 1%.
- Index got support due to rise in information and communication (+0.8%), Amusement services (+1.4%), Medical and Healthcare (+0.2%) and learning services (+0.7%)
Data continue to pose doubt on BOJ’s qualitative and quantitative easing (QQE) program to boost domestic demand.
Yen which is trading at 119.6, is likely to continue its range bound (118.2-120.8) trade, unless further cues appear either from FED or BOJ.
The material has been provided by InstaForex Company – www.instaforex.com