Japanese unemployment edges higher, output down
Figures today revealed a surprise rise in Japan’s unemployment rate.
The Ministry of Internal Affairs and Communications said unemployment edged higher from 5.1% in April to 5.2% in May.
Analysts had expected a fall to 5%.
However, the availability of jobs in the world’s second largest economy improved. The jobs-to-applicants ratio grew from 0.48 in April to 0.50 in May.
In the meantime, figures also released today showed a decline in factory output, which fell 0.1% in May on the month.
This represents the first fall in three months and again misses expectations for a flat reading.
According to the Government, lower factory output of larger cars, semiconductor-related machinery and flat-panel display machinery contributed to the monthly fall.
However, the figures are a temporary blip, according to analysts, and output is expected to recover by 0.4% and 1% in June and July respectively.
Last week, official figures revealed Japanese core consumer prices fell 1.2% in May from a year earlier – representing the 15th consecutive monthly decline that the world’s no.2 economy has been in deflation.
A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.
Deflation was a problem for Japan during its so-called “Lost Decade” in the 1990s in which the economy struggled with falling prices.
Another major issue for the Japanese economy is the country’s debt – which at nearly 230% of GDP is the highest of any industrialised nation.
The debt is the result of decades of stimulus spending and low tax receipts.
Japan’s new Prime Minister, Naoto Kan, has warned of tough measures in order to reduce the debt mountain – or risk a Greece-style debt crisis.
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