The slowdown in recurring profits reflects rising material costs in manufacturing and higher personnel costs in non-manufacturing.
The shrinking trade balance isn't a bad thing because it's partly a result of strong domestic demand. Given that domestic demand is driving the economy, the rise in oil prices alone isn't enough to derail growth.
His comments suggest that the BOJ would not end its policy at the February meeting, but he did not deny the possibility of a policy shift in March or April.
Domestic demand is clearly the driving force. With strong capital spending plans and signs of rising bonuses, there's a good chance that the economy will grow more than an annualized 2 percent in the fourth quarter.
For the economic recovery to be sustainable, domestic demand needs to strengthen and the consumer prices need to show consistent gains. Both of these factors are most directly influenced by wages.
The Bank of Japan has already laid out a map on how it will alter its policy framework, and financial markets are factoring that in. Opposition from the government and politicians to the central bank will probably continue at least through the end of March.
But special factors, such as a reduction in fixed telephone fees, kept the growth down to 0.1 percent.
There is robust demand for Japanese goods from the U.S. and Asia.
The importance of this spring labor offensive is not whether the increase was 2,000 yen or 500 yen, but that it breaks open a dam that will encourage future base salary increases.
With economic growth being driven by consumer spending, the Bank of Japan will want to end quantitative easing soon to avoid the risk of the economy overheating.
