DEFLATION AT WORK
asia.reuters.com
Deflation has been gnawing at the economy for more than three years, destroying profits and adding to the banking system's already huge debt burden, the resolution of which is now a central focus of Prime Minister Junichiro Koizumi's government.
His financial and economics minister, Heizo Takenaka is due to flesh out details of bank reforms later on Friday, although analysts have warned that harsh steps could add to the pain.
Mizuho Holdings Inc, the world's largest bank by assets, announced plans earlier this week to shed a total of 6,300 staff by March 2005 as part of its cost-cutting drive.
In late October, computer and electronics conglomerate Fujitsu Ltd said it would shed 7,100 jobs in the business year to next March to cope with a protracted slump in telecoms equipment.
The bleak outlook for income and unemployment is keeping personal consumption, the biggest chunk of the economy at 55 percent, sluggish.
Average spending by households of Japanese wage earners, a key gauge of personal consumption, fell a real 0.7 percent in October from a year earlier, government data showed on Friday.
Wage-earners' monthly spending per household in October was down a real 2.7 percent from September on a seasonally adjusted basis, the Ministry of Public Management, Home Affairs, Posts and Telecommunications said.
The propensity-to-consume index, which measures the proportion of disposable income that households spend in the month, fell to a seasonally adjusted 72.7 percent in October from 75.0 percent in September, the ministry said. |
