Japan’s jobless rate fell unexpectedly for the first time in seven months in August, while consumer spending rose, official data showed yesterday, boosting hopes the economy is healing after its worst slump in decades.
The jobless rate fell to 5.5 percent in August, from a record high of 5.7 percent in July, the Japanese government said. The improvement surprised markets, which had anticipated a figure of 5.8 percent.
“The job market is still bad but is coming out of the worst period,” UBS economist Takuji Aida said.
Even so the unemployment rate will stay high for a country that once boasted a job-for-life culture, he said.
The number of people out of work stood at 3.61 million in August, up 890,000 from the same month last year — the 10th straight year-on-year increase.
Household spending rose by 2.6 percent in August from a year earlier, reversing a drop of 2 percent in July, the government said.
Together with the drop in the jobless rate and a rise in retail sales, “the spending number raised a possibility that the state of the household sector has improved more than we had expected,” JP Morgan economist Masamichi Adachi said.
However, “it looks too early to judge that the households are now gaining strength,” he said, noting that the effect of stimulus measures would eventually fade.
While the job market slump appears to be easing slightly, conditions remain tough for people looking for work, with only 42 offers for every 100 jobseekers in August, matching a record low set in July.
There are concerns that unemployment could worsen again later this year as firms continue to restructure and as the effect of pump-priming measures such as government incentives to buy cars in Japan and overseas begin to wear off.
The jobless rate may rise to as high as 6.0 percent by the end of the year, said Susumu Kato, chief Japan economist at the Calyon investment bank.
“August labor market indicators appeared to stop worsening, but this can’t be understood as a turnaround in job market conditions,” he warned.
However, “recent sustained gains in industrial production could help to increase employment among some manufacturing sectors,” he said.
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