Japan Rebound May Be Cooling as Jobless Rate Rises
Japan’s jobless rate unexpectedly rose and retail sales fell for a second month, underscoring concern that an economic recovery will lose momentum in the face of gains in the yen and Europe’s debt crisis.
The unemployment rate increased to 4.6 percent in April from 4.5 percent in March, the first increase in three months the statistics bureau said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was 4.5 percent. Retail sales fell 0.3 percent from March, the Trade Ministry reported.
Sony Corp. (6758) is among manufacturers to have announced job cuts that may weigh on an economy that relied on consumer spending for most of its growth in the first quarter. The expansion may slow as boosts from earthquake reconstruction and government incentives to spur spending fade and Europe’s sovereign-debt crisis and austerity measures cap exports.
“Employment conditions are not improving,” said Masamichi Adachi, senior economist at JPMorgan Securities in Tokyo and a former central bank official. “Recent economic indicators and a deterioration in financial markets suggest that strong growth cannot be maintained.”
The Nikkei 225 Stock Average snapped a three-day rally, falling 0.3 percent as of 10:22 a.m. local time. The yen traded at 79.53 per dollar, compared with a post World War II high of 75.35 in October.
Bank of Japan board members said last month they need to counter the mistaken perception that central bank asset purchases will automatically increase, a record of the BOJ’s April 27 meeting released yesterday showed. Policy makers have to add stimulus should the yen advance “significantly,” according to Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo.
The overall unemployment results are “not that good,” said Azusa Kato, an economist at BNP Paribas SA in Tokyo. “Today’s employment data suggested a mismatch of jobs and geographic areas is widening.”
There has been an increase in construction jobs as reconstruction projects in the disaster-struck north have started, pushing up labor demand and costs in those regions, Kato said.
At the same time, a succession of Japanese manufacturers have plans to cut job this year, with both Sony and NEC Corp. (6701) announcing cuts of 10,000 workers worldwide. Shares in Renesas Electronics Corp. (6723) fell yesterday to the lowest level on record after the company was said to be planning to eliminate 10,000 jobs and raise 100 billion yen ($1.3 billion) under the latest draft of a restructuring plan.
Spanish Prime Minister Mariano Rajoy yesterday called for a show of force from European authorities as his government sought ways to avoid tapping markets to fund the bailout of the nation’s third-biggest lender.
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