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Friday, May 30, 2003

Japanese Unemployment on the Rise

More depressing numbers from Japan, as the currency screw tightens it's hard to imagine anything different.

The number of unemployed in Japan remained just below an all-time high and goods prices fell for a 43rd consecutive month in April, reinforcing the impression that Japan's economy may be drifting back toward recession. Unemployed stayed at 5.4 per cent for a second consecutive month, just below the high of 5.5 per cent it hit in December and January. The number of unemployed increased 100,000 to 3.9m while the number of people in work fell 270,000.

Economists were divided on the state of the labour market. Takuji Aida, fixed income analyst at Merrill Lynch, said that while the labour market remained tough there were no signs of sharp growth in unemployment, as restructuring seemed to have run its course and corporate earnings were increasing. However, Seiji Adachi, economist at Credit Suisse First Boston, said that employment conditions were deteriorating as more women were entering the market to look for work to supplement their husbands' falling incomes.

The lack of positive news strengthened the argument that Japan's economy may be heading from minimal growth back into recession. GDP figures released earlier this month showed Japan's economy did not grow at all in the three months to March. This followed a gradual slowing of growth in the previous three quarters, and led many economists to say that if exports continue to soften the economy could shrink this quarter. The figures also demonstrated that companies are giving themselves more flexibility in recruitment to cut costs. The number of full-time jobs sank for the 21st consecutive month while part-time jobs, which companies use to adjust staff numbers to meet demand, increased for the 16th month in row. The ratio of jobs to applicants remained unchanged from the previous month, with 60 jobs available for every 100 job-seekers.

Separate data released on Friday showed Japan's consumer price index down 0.4 per cent in April from a year earlier, the 43rd straight month of decline. It was the smallest fall in two and a half years but this was due to a government-mandated increase in the prices of some medical services. If medical prices had remained unchanged, prices would have been down 0.6 per cent, the same as in March, economists said. The consumer price index is one of two closely-watched measures of deflation. The second, included in Japan's GDP figures, is released quarterly, and for the three months to March showed the largest drop ever, a fall of 3.5 per cent. A government report released on Friday spelt out how deflation is hurting Japanese people by putting downward pressure on household income, increasing redundancies and ramping-up the burden of mortgage loan repayments for borrowers. Young people in particular are suffering, the report said, as they are unable to attain financial independence in the current environment, or make plans for the future.
Source: Financial TimesLINK

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