Japan mixed data spark growing worries
By Tomoko A. Hosaka |
August 28, 2010, Saturday
|
Print Edition
Print Edition
JAPAN'S government released a mixed bag of economic indicators yesterday that did little to inspire confidence in the country's fragile recovery.
The unemployment rate in July improved for the first time since January, but families made less money. Deflation persisted as consumer prices fell for the 17th straight month.
Household spending rose, but the upswing may falter once government incentives for purchases of goods such as energy-efficient household appliances expire later this year.
The latest numbers underscore growing uncertainty for Japan's export-driven economy as it faces a surging yen and slowing global growth. In the April-June quarter, Japan lost its place to China as the world's No. 2 economy after posting annualized growth of just 0.4 percent.
"In our view, concern looms large for consumption given a weak labor market and fading policy stimulus," said Goldman Sachs economist Chiwoong Lee said in a note to clients.
Prime Minister Naoto Kan told reporters that Japan will take "decisive action" when necessary against excessive foreign exchange volatility.
The remarks were his strongest so far on currencies and suggests a new sense of urgency as the 63-year-old faces his first challenge for power less than three months since taking office. Veteran powerbroker Ichiro Ozawa, who has been critical of Kan's performance, surprised the political world on Thursday by announcing he would run against Kan for the Democratic Party presidency. If Ozawa topples Kan next month, he would become Japan's sixth prime minister in three years.
Kan's staff is working on new stimulus measures, and an outline will be decided next Tuesday. Kan also said he will meet with Bank of Japan Governor Masaaki Shirakawa next week. Growing political pressure is expected to prompt the central bank to ease monetary policy next month.
The nation's seasonally adjusted unemployment rate improved to 5.2 percent from 5.3 percent in June, according to the Ministry of Internal Affairs and Communications.
The unemployment rate in July improved for the first time since January, but families made less money. Deflation persisted as consumer prices fell for the 17th straight month.
Household spending rose, but the upswing may falter once government incentives for purchases of goods such as energy-efficient household appliances expire later this year.
The latest numbers underscore growing uncertainty for Japan's export-driven economy as it faces a surging yen and slowing global growth. In the April-June quarter, Japan lost its place to China as the world's No. 2 economy after posting annualized growth of just 0.4 percent.
"In our view, concern looms large for consumption given a weak labor market and fading policy stimulus," said Goldman Sachs economist Chiwoong Lee said in a note to clients.
Prime Minister Naoto Kan told reporters that Japan will take "decisive action" when necessary against excessive foreign exchange volatility.
The remarks were his strongest so far on currencies and suggests a new sense of urgency as the 63-year-old faces his first challenge for power less than three months since taking office. Veteran powerbroker Ichiro Ozawa, who has been critical of Kan's performance, surprised the political world on Thursday by announcing he would run against Kan for the Democratic Party presidency. If Ozawa topples Kan next month, he would become Japan's sixth prime minister in three years.
Kan's staff is working on new stimulus measures, and an outline will be decided next Tuesday. Kan also said he will meet with Bank of Japan Governor Masaaki Shirakawa next week. Growing political pressure is expected to prompt the central bank to ease monetary policy next month.
The nation's seasonally adjusted unemployment rate improved to 5.2 percent from 5.3 percent in June, according to the Ministry of Internal Affairs and Communications.
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