TOKYO, DEC 26: Japan’s struggle to emerge from a decade-long slump looked in more trouble on Tuesday with unemployment at an eight-month high, retail sales falling for the 44th straight month and household spending slipping.Prime Minister Yoshiro Mori said although the rise in unemployment was a source of concern, it was a result of the transformation of Japanese industry. “It is something we need to worry about, but it is also unavoidable,” Kyodo news agency quoted Mori as saying.
“Japan’s industrial structures are transforming rapidly, the environment of employment is in transition, and it’s time for a change in the labour market,” he said.
In another dismal pointer to the economy’s fragility, consumer prices in Tokyo fell by a record one per cent this year, sounding a warning to the Bank of Japan as it keeps vigil for signs of deflation in the slowing economy.
Japan’s jobless rate rose to 4.8 per cent in November from 4.7 per cent the previous month, while spending by wage earners’ households fell a real 2.3 per cent in November from a year earlier, the Management and Coordination Agency (MCA) said.
The jobless rate hit a record 4.9 per cent in February and March. “I think the yellow light is blinking. The January-March quarter will be a crucial period for the Japanese economy,” said Kazuhiko Ogata, senior economist at HSBC Securities Japan.
The figures are bad news for policy-makers, who are desperate to get the world’s second-largest economy on a self-sustaining recovery path. Other signs of a slowdown in Japan’s recovery have recently begun appearing, with growth in exports and corporate capital spending, the key driving forces of the recovery so far, both decelerating. Economics Minister Fukushiro Nukaga expressed caution about the outlook for personal consumption, the largest and weakest chunk of the economy.
“We had hoped that a rise in winter bonus payments would help push up consumption, but in reality, that will not be very likely,” he told a regular news conference.
MIXED SIGNALS: Despite a near-record high jobless rate, an MCA official pointed to some bright spots, saying the number of people in work rose in November, meaning the job market is expanding. Some economists agreed.“Although the jobless rate worsened, the number of employees and the jobs-to-applicants ratio rose. Employment conditions are gradually improving,” HSBC’s Ogata said. “But with some big corporate bankruptcies this year and weak stock prices hurting sentiment, personal consumption is unlikely to get better anytime soon,” he added. The jobs-to-applicants ratio rose to 0.65 in November, meaning there were 65 openings for every 100 job seekers, up marginally from 64 in October, the Labour Ministry said.
STAGNANT PERSONAL CONSUMPTION: The household spending data showed that incomes rose 0.6 per cent in November in real terms, but fell 0.1 per cent in nominal terms, the 17th consecutive month of decline.“Personal consumption continues to be weak,” a senior MCA official, Masato Okamoto, told reporters. The Trade Ministry said nationwide retail sales fell 0.7 per cent in November from a year earlier, the 44th straight month of decline. Sales at large stores, which are more sensitive to changes in consumer spending, fell 4.1 percent, excluding new store openings and closures.
“Worries about economic prospects, especially about job conditions from the consumers’ point of view, are dampening personal spending,” said Takao Hattori, economist at Tsubasa Research Institute. Fierce competition dampened consumer prices, causing a fall in the cost of durable goods and dining out, said Hideyuki Suzuki, head of the Price Research Division at the Economic Planning Agency (EPA).
Nationwide consumer prices in November dipped 0.5 per cent year-on-year, down for a record 15th straight month. Tokyo area consumer prices, dipped 0.6 per cent in December from a year earlier for a record 16th straight month of decline, the MCA said.
In calendar 2000, Tokyo area consumer prices fell 1.0 per cent, the biggest fall since 1971, the earliest year for which comparisons are available under present calculation methods.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
