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Tuesday, December 02, 2003

Japan's Employment Connundrum

Employment in Japan is picking up: well not exactly. The problem is easing during this expansionary part of the cycle, but only because more people are leaving the labour force than are entering. Just a quick reality check reminder: the optimistic theory is that growth will be sustainable since participation levels will rise. Fine, but where's the evidence?

Japan's economic recovery remained on track in October as deflationary pressures eased and industrial output kept growing despite a slight uptick in the jobless rate, economists said............

A trade ministry survey of select manufacturers showed industrial output was expected to rise 3.1 percent in November but fall 0.9 percent in December. "There's been a striking acceleration in production in recent months," said Richard Jerram, chief economist at ING Securities. "There's a cyclical recovery taking place and the speed of that recovery seems to have accelerated." Economists said Japan's industrial output in October-December was on pace to outstrip the previous quarter by a red-hot 20 percent, lifted by growing exports, although most expected revisions to trim the gains............

However, core consumer prices in Tokyo in November showed a 0.2 percent fall from both the previous month and a year earlier. The year-on-year rate declined for a record 50th consecutive month, but the size of declines has been on the downtrend. "Through structural reforms, we want to put Japan on a path toward stable growth and to conquer deflation," Economic Minister Heizo Takenaka told reporters Friday. Economists had mixed views on the uptick in the unemployment rate to 5.2 percent in October from 5.1 percent in September, off the post-war high of 5.5 percent last reached in January. The jobless rate for women rose 0.2 point to 4.9, while the jobless rate for men fell 0.1 point to 5.4 percent. "I think the job-hunting mindset has actually improved," said Hidehiko Fujii, economist at Japan Research Institute. "Women have probably entered the workforce looking for a job after seeing signs of economic improvement. But economist Ryo Hino of JP Morgan said the increased jobless rate was "clearly a negative outcome," noting that while the ranks of unemployed shrank by 190,000 people, some 370,000 left the workforce altogether from a year ago. Spending at households of salaried workers fell 1.1 percent year on year in October.
Source: Yahoo News

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