Despite rising unemployment in Japan and the fear of its potential impact on consumer confidence, so...
Despite rising unemployment in Japan and the fear of its potential impact on consumer confidence, some positive statistics are being published.
Japan's unemployment rate hit a record high of 5.5% in January, up from a revised 5.3% in December. Unemployment rose to a seasonally adjusted 3.68 million people from 3.56 million a month earlier, according to data from the Japanese statistics bureau.
Meanwhile government forecasts tipped a fall in industrial production in February, as sagging exports hurt demand at the country's factories, according to Bloomberg.
Stephen Hall, Japanese investment manager for Britannic Asset Management, says despite the present unemployment figures in Japan there is some positive news emerging.
He notes: 'Fourth quarter GDP rose by 0.5% quarter on quarter, well ahead of the consensus estimate for a fall of 0.4%. The biggest surprises came from personal consumption and capital expenditure, which were both up 0.1% against expectations of a 0.7% fall.'
Andrew Smithers, chairman at economists Smithers & Co, says Japan's population of working age individuals is decreasing by around 0.3% per year and he expects this to accelerate to around 0.6%.
He notes: 'The same age group in Germany is growing at around 0.3% and that of the US by around 1%-1.5%. Like the US but unlike Germany, a relatively high percentage of Japan's population is employed.
'Japan does not, therefore, have the option of improving labour laws and practices to expand its labour force. Unless Japan can improve labour productivity at a faster rate than proves possible in Europe and America, it must have a significantly lower rate of growth.'
Hall says that industrial production figures posted their first monthly gain for five months in January, rising by 1.5%, well ahead of consensus. The Shokochukin index of small business confidence, which had recently begun to decline, had ticked in February from January's figure.
Smithers notes even if Japan can improve its labour productivity in line with Europe and America at about 2% per year, it will still have a GDP growth rate of less than half that of the US due to substantial demographic differences. He says: 'Short of an economic miracle to boost labour productivity growth to an unprecedented rate for a mature economy, there is only one way for Japan to improve its poor profitability. This is to reduce its investment rate by a very large amount.'
Motomitsu Honma, an economist at Sumitomo Mitsui Asset, says: 'The employment condition is worsening and that will put negative pressure on consumer spending. You can already see in household spending numbers that it is under pressure.''
Hall notes: 'Fukui, the new governor of the Bank of Japan, takes up his position this month and will be doing interviews over the next few weeks. He is seen as a conservative choice for the job.
'There was the expectation somebody more radical and aggressive would have been appointed. I am interested to hear what he has to say regarding consumption and unemployment, among other items.'
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