Japan’s jobless rate steady, household spending dips

TOKYO.
JAPAN’S unemployment rate held firm in January but consumer spending slipped for the fourth straight month, reflecting the challenges for the country’s export-led recovery.
The jobless rate held steady at 4,9 percent in January, in line with forecasts, but the ratio of jobs-to-applicants rose to its highest level since January 2009 in a further sign of economic recovery.
But household spending fell one percent in January from a year earlier, following a 3,3 percent dip in December, signalling weak domestic demand and underlining Japan’s reliance on exports.
While slightly better than forecasts of a 1,4 percent decline, the latest data show “private consumption will not improve unless exports recover and lift corporate earnings to increase salaries,” said Taro Saito, senior economist at NLI Research Institute.
Private consumption makes up around two-thirds of Japan’s gross domestic product.
“It will take some more time before improvement in exports will lead to larger household spending,” added Saito.
On Tuesday Prime Minister Naoto Kan’s Democratic Party of Japan pushed through the lower house of parliament a budget bill for a record spending plan for the year starting April 1, but political deadlock threatens funding bills.
Kan’s DPJ, which holds a majority in the lower house, is expected to meet further resistance over the 92,4 trillion yen (US$1,1 trillion) budget, which aims to boost the flagging economy but adds to a mountain of public debt.
Worries over the government’s ability to contain the industrialised world’s largest debt, at around 200 percent of GDP, prompted Standard & Poor’s to downgrade Japan in January. Moody’s last week lowered its outlook.
However, most economists expect Japan’s economy to expand again in the January-March period after gross domestic product contracted by an annualised 1,1 percent the previous quarter.
Japan reported that its industrial output rose for a third straight month in January on stronger overseas demand.
But the Bank of Japan has left its key rate near zero in an ongoing battle with falling prices, which prompt consumers to defer purchases, clouding the outlook for corporate investment and drag down growth.
NLI’s Saito said the 1.0 percent fall in household consumption reflected the end of the government’s incentive programme for people to buy environmentally friendly cars, while the data also showed restraint in spending on travelling and dining out. – AFP.