Japan’s Production
Declines, Jobless Rate Increases
Japan’s industrial production and
household spending slipped in May and the unemployment rate
unexpectedly increased, in signs that the recovery of the
world’s second-largest economy may slow.
The figures underscore Japan’s
reliance on exports to propel its rebound, and follow calls by
the US for Japanese policy makers to stimulate domestic
demand. For Prime Minister Naoto Kan, facing a mid-term
election in less than two weeks, the figures may pose a
warning that it is too soon to tighten fiscal policy to shrink
the nation’s debt.
The jobless rate reached 5.2 per
cent in May, the third straight monthly increase and the
highest level since December, the statistics bureau said in
Tokyo. Household spending retreated 0.7 per cent from May
2009, the office also said, a day after another report showed
retail sales slowed last month. Factory output dropped 0.1 per
cent from April, the Trade Ministry said, compared with the
median forecast in a Bloomberg News survey of 24 economists
for a flat reading.
Export
Driver
Exports have been driving the
nation’s recovery from its worst post-war recession, led by
demand from Asia. Spending by Japanese households has relied
on government incentives to purchase cars and electronic
appliances, and been insufficient to rid the economy of
deflation.
“Japan’s growth has yet to be
sustained by domestic demand alone,” said Yoshimasa Maruyama,
a senior economist at Itochu Corp in Tokyo. “The recovery will
continue as long as exports keep growing.”
Companies accumulated stockpiles
at the fastest pace in more than five years in May as
shipments fell, the Trade Ministry said, indicating global
demand may be cooling. Inventories rose 2 per cent, the most
since August 2004, and shipments slid 1.7 per cent. Still,
businesses plan to increase production by 0.4 per cent in June
and 1 per cent in July, according to the report.