Japan Jobless Rate Climbs for First Time Since July
Japan’s unemployment rate rose for the first time in four months in November, an indication job growth may not be strong enough to support the economy’s recovery from its deepest postwar recession.
The jobless rate climbed to 5.2 percent from 5.1 percent in October, the statistics bureau said today in Tokyo, matching the median forecast of 26 economists surveyed by Bloomberg News.
More than $2 trillion in global stimulus spending has revived Japanese exports and production, fueling corporate sentiment in the world’s second-largest economy. The improvements haven’t spread to households, whose confidence is waning because of wage cuts and deflation.
“Compared to the situation a couple months ago, I think we can say the job market is no longer worsening,” said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute in Tokyo. “But companies still have a strong desire to save labor costs, and they’re certainly not ready to start aggressively hiring again.”
The yen traded at 91.47 per dollar at 10:32 a.m. in Tokyo from 91.43 before the figure was published.
A separate report showed consumer prices slid for a ninth month in November. Prices excluding fresh food slid 1.7 percent from a year earlier, matching the median estimate of 25 economists surveyed by Bloomberg News.
Sales Tumble
Sales at the nation’s largest service companies will tumble 11.8 percent in the year ending March 31, the Bank of Japan’s Tankan survey showed this month, more pessimistic than projections made three months ago. Consumers weighed down by 17 months of pay cuts are demanding lower prices, squeezing profits.
CSK Holdings Corp., a computer-services company, said this month it will cut 440 jobs by offering employees incentives to quit.
“The jobless rate dropped in the past few months not because of a rise in demand for workers, but because people became so discouraged” they stopped looking for work, said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Today’s figures confirm that it’s too early to say we’re seeing improvements in employment.”
Household spending rose 2.2 percent in November, advancing for a fourth month, the government said today.
The 7.2 trillion yen stimulus package Prime Minister Yukio Hatoyama’s Cabinet compiled this month allocated 600 billion yen to support employment. The money will be distributed to employment offices and fund an expansion of a subsidy program that encourages companies to keep people on their payrolls.
Bank of Japan policy makers, who also unveiled emergency measures to support growth this month, said on Dec payday loans for people with bad credit. 18 that they are intolerant of price declines, spurring expectations among investors they will hold interest rates near zero until inflation returns. Governor Masaaki Shirakawa said this week the announcement may influence investors’ expectations and lower borrowing costs further, supporting growth.
‘Binding Hands’
“The BOJ’s price statement is binding the bank’s hands and making it harder for them to raise interest rates,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “Small price gains will probably be insufficient to prompt a rate hike.”
Core consumer prices in Tokyo slumped 1.9 percent in December from a year earlier, today’s report showed. Figures for the capital are released a month earlier than nationwide data, making them a harbinger of price trends. Nationwide prices excluding energy and food, which economists say are a better reflection of price trends than the core measure, fell 1 percent in November from a year earlier.
Falling wages are discouraging households and prompting companies to cut prices to attract customers.
Cut Prices
Seiyu Ltd., a supermarket operator owned by U.S.-based Wal- Mart Stores Inc., this week cut the price of coats, sweaters, shoes and underwear by as much as 60 percent to boost sales as consumers tighten their purse strings. Rival Ito Yokado, owned by Seven & I Holdings Co., last week held a cash-back campaign for clothing and household goods.
Nevertheless, there are signs that the labor market won’t deteriorate further. The job-to-applicant ratio rose for a third month to 0.45, meaning there are 45 positions for every 100 candidates, the Labor Ministry said today. The report also showed there were 80 newly advertised jobs in November for every 100 people who started looking for a job that month, the most since January. Economists regard the gauge as a leading indicator of employment.
Analysts say manufacturers, who increased workers’ overtime hours for a seventh month in October to keep up with a jump in orders, will eventually need to hire more staff as exports improve. Shipments to Asia rose for the first time since September 2008 last month, a Finance Ministry report showed this week.
“There’s no doubt the job market will keep improving as long as production and exports keep growing,” said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo. “But I’m concerned these improvements are going to be very, very slow.”
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