Japan's jobless rate rises, spending, industrial production down

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

thestar.com.my > Business

Japan's jobless rate rises, spending, industrial production down

TOKYO (AP) - Japan's economic problems deepened in April, with unemployment rising and industrial production and wage-earner spending dropping, the government said Tuesday.

The barrage of dismal figures in part reflected seasonal trends, but still underscored the troubled economy's continuing failure to emerge from an 11-year downturn, the deepest since the end of World War II.

The jobless rate rose to a near-record 4.8 percent in April, the first increase in three months, the Ministry of Public Management said. The unemployment rate peaked at 4.9 percent in December and January, but had dropped to 4.7 percent in February and March.

Japan's economic troubles come as growth in the United States in Europe has slowed, shrinking the market for the Japanese exports that industry here had come to rely on.

Industrial production fell 1.7 percent in April, the second straight decline in production at the country's factories. The figure fell 2.1 percent in March, the Ministry of Economy, Trade and Industry said.

Economic and Fiscal Policy Minister Heizo Takenaka told Parliament on Tuesday that structural problems in the Japanese economy have been exacerbated by the U.S. slowdown.

``The effects of the U.S. economy on Japan have been stronger than expected, which is why the (Japanese) economy is currently weakening further,'' Takenaka said.

A chronic weak spot in the economy, spending, also took a hit in April. Spending by wage earners declined for the first time in five months, falling 4.4 percent from a year earlier.

The decline was the largest since December 1999, when spending plummeted 4.7 percent, the government said, blaming the decline in part on falling purchases of automobiles and other big-ticket consumer durables.

The figures came out as the government of Prime Minister Junichiro Koizumi, who took office in April, works on an overhaul of the economy that is expected to worsen conditions in the short-run.

Finance Minister Masajuro Shiokawa said on Tuesday that job conditions were ``in a serious state,'' and he refrained from making any predictions about when the economy would improve.

``I can't tell when the economy will start recovering because I'm not divine,'' he said. ``Anyway, efforts in the private sector are very important for a recovery.''

The unemployment rate is especially worrying to economic planners because it makes consumers less willing to spend, which could force companies to rein in production, lowering their profits.

Labor conditions in Japan are expected to worsen if the government follows through with plans to force the country's ailing banks to dispose of their bad loans, since that could increase corporate bankruptcies.

Seasonal trends also played a part in the April unemployment figure, since jobs tend to be scarcer at the start of Japan's fiscal year.

The number of those with work dropped for the first time in seven months, though the government also said Tuesday that the ratio of job offers to job seekers rose slightly in April.

The rise in unemployment could be taking its toll on spending, a perennial weak spot in the economy. The government has in recent years been trying, without much success, to encourage thrifty consumers to spend more.

The April decline in wage-earner spending comes after increases earlier in the year as consumers rushed to buy household durable goods _ and dispose of their old ones _ before a stricter recycling law took effect April 1.

Wage earner spending data, which tend to be volatile from month to month, are an important gauge of personal consumption. Consumption accounts for roughly 55 percent of Japan's gross domestic product, the sum of all goods and services the country produces.

In a worrying sign, real wages fell for the fifth straight month, declining 0.5 percent from a year ago, indicating that deflationary pressure on corporate profits may be shaving incomes. - AP

-- Martin Thompson (mthom1927@aol.com), May 29, 2001

Moderation questions? read the FAQ