Robust exports support Japan output, but unemployment remains high
Thu Dec 25,11:14 PM ET
TOKYO (AFP) - Robust exports supported Japan's industrial output in November but the world's second-largest economy was still mired in deflation and high unemployment, government data showed.
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Industrial output in November rose 0.8 percent from the previous month for the third consecutive month-on-month rise, the trade ministry said.
Production showed signs of recovery but the prospect for final demand was still uncertain, it said.
"The production of general machinery, electronics devices and electric products was brisk thanks to strong demand for the application in cellular phones, DVD players and digital home products," a ministry official said.
"We can conclude that production is on a recovery trend," he said.
The trend, however, was unlikely to result in boosting the jobs market immediately, analysts said.
Japan's jobless rate in November stood at 5.2 percent, unchanged from the previous month but still high for the country that used to provide many jobs for life, government data showed.
The number of people without jobs totalled 3.30 million, down 80,000 from a year earlier, marking the sixth straight month of decline.
The number of those laid off fell 210,000 from the previous month to 940,000 while 1.12 million people voluntarily quit their jobs, up 50,000 from a month earlier.
"It appears the speed of improvement has slowed down," said Shun Maruyama, economist at UFJ Institute. "The data confirmed that corporate restructuring has run its course, but the job market is not growing as companies continue to cut costs, particularly labour costs.
The rise in production may prompt companies to hire people part-time, while full-time jobs are becoming scarce, he added.
Meanwhile, deflation remained prevalent in Japan. The core consumer price index (CPI), which excludes volatile fresh food prices, fell 0.1 percent in November from a year earlier.
Core Tokyo consumer prices, a leading indicator for nationwide prices, also fell 0.1 percent at mid-December, marking a 51th consecutive year-on-year decline. For the whole of 2003, Tokyo area consumer prices fell 0.4 percent from 2002 in both all-in and core readings, marking five years of declines.
"Prices of goods have fallen due to technological reasons and low-priced imports, particularly from China. This will continue to pressure the CPI," said Junichi Makino, economist at Daiwa Institute of Research.
"Prices of services are unlikely to rise because companies are cutting costs. This will also weigh on the job market by pressuring wages," he said.
Nevertheless, salaried household spending -- 60 percent of total household spending in Japan rose 0.4 percent in November year on year after falling 1.1 percent in October.
The fragile recovery trend in Japan may falter, depending on the stability of the US economy and the threat of a high yen, Makino added.
"If the US economy lost its steam due to the fading effects of tax cuts, it would hurt the Japanese economy," he said, adding that a continued rise of the yen against the dollar could depress corporate earnings and dampen capital investment.
A strong yen hurts Japanese exports by making Japanese products less price competitive. |
