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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (34679)	8/1/2005 3:09:29 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 116555

Printer-Friendly Format Japan's Wages Rise, Tokyo Land Prices Gain, Signaling Deflation Is Easing Japan's Wages Increase and Tokyo Land Prices Rise (Update1) Aug. 1 (Bloomberg) -- Japan's wages had their biggest gain in seven months in June and land prices in Tokyo rose for the first time in 13 years in 2004, signaling that deflation in the world's second-largest economy is easing. Wages rose 1.1 percent to 467,814 yen ($4,156), the biggest gain since November, the Ministry of Health, Labor and Welfare said in a report today in Tokyo. Land prices in Tokyo, home to one in 10 Japanese, rose 0.4 percent last year, the first gain since 1991, a separate government report showed. Manufacturers including Toyota Motor Co. are paying their workers more, stoking the consumer spending that makes up half the economy. Signs that Japan's seven-year bout of falling prices is moderating may prompt the central bank to tighten monetary policy this year by making less money available to lenders. ``Today's reports were both positive as they confirmed that deflationary pressures are easing,'' said Seiji Adachi, a senior economist at Deutsche Securities in Tokyo. ``The Bank of Japan will probably move to cut its reserve target as soon as the third quarter, when consumer price declines are expected to bottom.'' The bank makes between 30 trillion yen and 35 trillion yen of reserves available to lenders. Governor Toshihiko Fukui has pledged to maintain the four year-old policy of pumping cash into the economy and holding rates near zero until core prices stop falling for at least a few months and the bank is sure they won't resume their declines. Bonds Ten-year bonds dropped, pushing yields to the highest in almost 11 weeks, on signs of a recovering economy. The yield on benchmark 1.2 percent bonds due in June 2015 rose 3.5 basis points to 1.34 percent, the highest for 10-year bonds since May 17, as of 3:07 p.m. ``Japan's economic recovery is becoming sustainable,'' Hideo Hayakawa, who heads the Bank of Japan's research and statistics department, said in an interview in Tokyo on July 29. ``There is a chance'' consumer prices will rise by the end of this year if oil prices maintain their gains and yen weakness persists. Core prices, which exclude fresh food, have risen in just one month since April 1998. Deflation has sapped Japan's economy by increasing the value of debt and eroding corporate revenue and profit. Deflation also encourages consumers to hold back on spending on expectations that goods will become even cheaper. Land prices in Tokyo rose 0.4 percent to 460,000 yen per square meter, with prices in the capital's central 23 wards gaining 0.9 percent to 593,000 yen, according to a report by the National Tax Agency. Nationwide land prices fell 3.4 percent to 112,000 yen per square meter, the thirteenth straight year of declines. Bonuses Raised A recovery in real estate values may prompt investment in home construction and spur consumer spending as people buy furniture and other products for their homes. Toyota raised bonuses for the sixth straight year to an average of 2.44 million yen. The world's second-largest automaker also raised monthly salaries by an average 6,900 yen this fiscal year. Consumer spending may have helped Japan's economy expand for a third straight quarter in the three months ended June 30, economists say. The economy probably grew at an annual 0.9 percent pace, according to the median forecast of 14 economists surveyed by Bloomberg News between July 4 and July 14. Japan's gross domestic product grew at a 4.9 percent annual pace in the first quarter. Japan fell into recession last year, its fourth since 1991, when export growth slowed and consumer spending faltered. Household Spending Spending by households headed by a salaried worker rose 0.1 percent in June from the a year earlier, the first gain in three months, as consumers spent more on clothing and cars, a government report on July 29 showed. The number of full-time workers increased for the sixth straight month, rising 1 percent in June from a year earlier, today's report showed. The number of part-time workers shrank for the second month in three, falling 0.2 percent in June. Japan's unemployment rate fell to a seven-year low of 4.2 percent in June, the government said last week.