Loan Data Suggest Japan Economy Is Rebounding

Lending by Japanese banks rose at its fastest annual pace in more than five years in July, data released early today indicated, providing further evidence of a rebounding economy.

The balance of outstanding loans held by Japan’s four main categories of banks rose 2% in July from a year earlier, Bank of Japan data showed.

It was the biggest year-over-year increase since the central bank began its current calculation method in January 2001, reaffirming that five years of decline in bank lending ended early this year as companies expanded investment.

“Bank lending is rising, with balanced growth in bank loans by city banks and regional banks, reflecting an economic recovery,” said Yoshimasa Maruyama, an economist at BNP Paribas.

Loans held by the four main categories of banks, including shinkin, or credit unions, stood at $3.9 trillion.

Excluding special factors such as loan write-offs, the loan balance rose 2.9% from the same month a year earlier.

What’s more, the 2.2% rise for lending by banks excluding credit unions was the largest gain since August 1992.

Japan’s economy has been enjoying a healthy recovery over the last few years, and corporate capital spending has become a key engine of growth, pushing up demand for bank loans.

Separate Bank of Japan data showed that the nation’s most widely watched measure of money supply rose a slower-than-expected 0.5% in July from a year earlier.

Economists had expected money supply to grow 1.3%.

The government is scheduled today to unveil its latest assessment of the economy.