Japan unemployment rate at record high, spending falls
Japan unemployment rate at record high, spending falls
Tamawa Kadoya, Reuters
Japan's unemployment rate climbed to a record high for the fourth straight month in December and household spending sagged, providing little hope that the world's second-largest economy will pull out of recession any time soon.
Industrial output gained for the first time in four months, but government officials were quick to play down any notion that this might be the start of a convincing recovery.
Japan's jobless rate rose to 5.6 percent in December, up from 5.5 percent in November, according to the Ministry of Public Management, Home Affairs, Posts and Telecommunications.
It was the highest rate since unemployment records began in their current form in 1953.
Separate data showed that average spending by households with wage-earners fell sharply, down a real 4.4 percent in December from a year earlier, the first decline in three months.
The politically sensitive unemployment rate rose as recession and tough competition forced companies to shed more workers.
Prime Minister Junichiro Koizumi has come under pressure from within his party to increase government spending to boost the economy, but has stuck to his line that structural reform is needed for long-term growth, even if that brings short-term pain.
Finance Minister Masajuro Shiokawa said the jobless rate would probably stay at high levels.
"This will probably continue," he told a news conference. "Businesses have just started to restructure."
To cope with the deteriorating economy, the government has compiled a 2.64 trillion yen (US$19.77 billion) extra budget that is expected to pass the Lower House later on Tuesday.
The passage of the budget bill was supposed to have taken place on Monday but was delayed after opposition lawmakers walked out in protest at a feud between Foreign Minister Makiko Tanaka and ministry officials.
It is the second supplementary spending package for the current fiscal year ending in March.
Rising unemployment has cast a shadow over hopes of a pick-up in personal consumption. Consumption accounts for about 60 percent of Japan's gross domestic product (GDP).
GDP is expected to contract by about one percent in the current fiscal year ending in March and the government is officially forecasting zero growth the following year.
"We cannot be complacent about the economy," said Trade Minister Takeo Hiranuma. "There is a serious risk of an economic downturn if the U.S. economic recovery undercuts expectations."
Separate data released by the Ministry of Health, Labor and Welfare showed the seasonally adjusted jobs-to-applicants ratio was 0.51 in December, meaning there were just 51 openings for every 100 job seekers. This was down from 0.53 in November.
Data released on Monday showed Japanese consumers reduced their retail spending for a ninth consecutive month in December.
The Ministry of Economy, Trade and Industry (METI) said industrial output rose 2.1 percent in December from a month earlier on a seasonally adjusted basis.
That was better than a median forecast of a 1.5 percent gain in a Reuters survey of 15 economists conducted last week.
Despite the rise, METI kept its assessment of industrial output unchanged, saying it remained on a declining trend.
Economists cautioned against reading too much into the output figures as improvements were narrowly based, largely concentrated in the high-tech sector.
Output for electrical machinery gained in December for the first time in a year, rising 3.5 percent from the previous month.
"It looks like output is bottoming out but it is not very broad-based and could be just a temporary bottom," said Yasuaki Kudamatsu, senior economist at Tsubasa Research Institute.
For October-December, output fell 2.3 percent from July- September, down for the fourth straight quarter.
"I think the yen has helped as well. This is still a short- term movement, however, and we need more time to see if we've hit bottom," said Tsuyoshi Segawa, equity strategist at Shinko Securities.