Japan's exports for July were still plunging 36.5% YoY versus a 35.7% YoY fall the previous month and even declined 1.3% month-to-month on a seasonally adjusted basis for the first time in two months--implying that the upward momentum in exports that helped Q2 GDP rebound is sputtering. Exports to China (19.5% total) were down 26.5% YoY, followed by a 38.9% YoY drop in exports to the US and a 43.9% plunge in exports to Western Europe.

With export-oriented and domestic companies like retailers continuing to reduce head counts, unemployment hit a record 5.7%, the highest since this stat began in the 1950s. The jobs-to-applicants ratio was 0.42.

Consequently, deflation is deepening in Japan, with core CPI falling a record 2.2% in July for the third month of record declines and the corporate services price index also falling a record 3.4%.

This on the eve of Japan elections on Sunday (August 30) for the lower house of the Diet, in which the Democratic Party of Japan is expected to trounce the LDP, which is the current ruling party, and which has been in power all but for a few months in 1993/1994 since the 1950s. While good news for Japan stocks, the widely expected victory is probably already baked in, and this week's string of economic data underscores the task ahead for the DPJ in reviving Japan's domestic economy.