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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: borb who wrote (1820)	3/31/1999 9:33:00 AM
From: chirodoc	Respond to of 3902

don't expect a fast wild rally in japan, still a few quarters of Asia-Pacific March 31 1999 Jobless rate in Japan exceeds US By Paul Abrahams in Tokyo Japan's jobless rate unexpectedly jumped last month to a new all-time high of 4.6 per cent and the government admitted for the first time that corporate restructuring would continue to push up unemployment. The Japanese jobless rate now exceeds the US rate by 0.2 percentage points and analysts say the actual situation is far worse than the headline unemployment figure suggests. For the first time more than 3m Japanese were out of work last month. Akitaka Saiki, the prime minister's foreign press secretary, conceded that unemployment was likely to rise in coming months. "There will be more lay-offs," he said. The admission and other disappointing economic data reinforced doubts about the government's argument that the country's economy is beginning to recover from its longest recession on record. In recent weeks, large numbers of companies have announced big restructuring packages, which include large-scale early retirement programmes and a freeze on hiring new graduates. Analysts warned the unemployment rate could jump above 5 per cent as early as April, when many groups traditionally take on new recruits. The rate had remained static at 4.4 per cent for the previous three months, and analysts had expected it to stay the same for February. Recent research by Nomura Research Institute suggested that if under- employed staff were made redundant, the unemployment rate in Japan would be about 15 per cent. The rising jobless rate is a significant factor behind sagging consumer confidence. Goldman Sachs, the US broker, warned that the situation was worse than it appeared, pointing out that the number of people employed fell 770,000 year on year during February to 63.34m, a 1.2 per cent drop and the biggest fall since 1975. "Anybody who thinks that corporate restructuring will take just two quarters and then there'll be a recovery is likely to deluding themselves," said Brian Rose, economist at Warburg Dillon Read in Tokyo. "There's a real danger that large-scale restructuring could trigger the next phase of the recession." The drop in employment, together with falling take-home pay - hit by reduced bonuses and overtime - continues to hold back consumer spending. Data released yesterday showed a sharp 4.1 per cent contraction in consumption during February by households with at least one worker. The propensity-to-consume index dropped to 67.8 per cent, its lowest level since 1970. At the same time, industrial output remains depressed and capital spending by companies continues to fall. Data released earlier this week showed industrial output during February fell 0.6 per cent month on month, well below forecast. Taichi Sakaiya, director general of the Economic Planning Agency, conceded yesterday that the economy was in "more severe than expected condition", and said that it could deteriorate further in the near term. Most private forecasters are predicting the economy will contract again this year. A poll of 13 financial institutions published this week by Reuters, the news agency, indicated the economy would contract 2.4 per cent in the year to March 31, and a further 0.8 per cent next financial year.