HTSC·2026-03-08 02:45Economic Performance - Japan's economic sentiment improved in February, with the manufacturing PMI rising by 1.5 percentage points to 53.0 and the services PMI increasing by 0.1 percentage points to 53.8[3] - The actual GDP growth for Q4 2025 was 0.2% on a quarter-on-quarter annualized basis, below Bloomberg's consensus expectation of 1.6%[3] - January retail sales increased by 4.1% month-on-month, significantly exceeding the market expectation of 1.5%, driven mainly by a 12.5% surge in automobile sales[3] Inflation and Prices - Japan's CPI in January dropped to 1.5%, marking the first time in four years it fell below the Bank of Japan's 2% inflation target[4] - The core CPI (excluding fresh food and energy) rose to 2.5% in February, up from 2.4% in January, indicating persistent inflationary pressures in certain sectors[4] Export and Industrial Production - Japan's exports saw a significant year-on-year increase of 16.0% in January, while imports grew by only 2.3%[4] - The industrial production index rose by 2.7% month-on-month in January, with most sectors showing strength in production[4] Labor Market - The unemployment rate remained stable at 2.6% as of December 2025, with nominal wage growth increasing to 2.4%[3] - The number of formal employees remained unchanged, while the number of informal employees slightly decreased, indicating a stable labor market[3] Asset Prices - Following the ruling party's electoral victory, the TOPIX and Nikkei 225 indices both surged by 10.4% in February[6] - The Japanese yen depreciated to 155.9 against the US dollar, reflecting expectations of continued monetary easing[6] Policy Outlook - The ruling Liberal Democratic Party secured a two-thirds majority in the House of Representatives, paving the way for more expansive fiscal and monetary policies[5] - The Bank of Japan is expected to adopt a more cautious approach to interest rate hikes, with market expectations for a 46 basis point increase in 2026[6]