Japan jobs data underline wage concerns
Saturday, 29 September 2007
David Pilling, FT Syndication Service
TOKYO: Japan's jobless rate rose for the first time in 11 months as more people sought work, underlining concerns about the slow pace at which economic growth has translated into benefits for workers.
The unemployment rate rose 0.2 point to 3.8 per cent in August, while the job to job-seekers ratio deteriorated slightly from 1.07 to 1.06. The unemployment rate for women rose from 3.3 per cent to 3.7 per cent, according to official figures released on Friday.
Fukushiro Nukaga, finance minister, played down the significance of the rise, saying that a stronger economy was encouraging people, especially women, to seek work. "I heard that a growing number of female job seekers was behind the hike in jobless rate," he said. "Although unemployment rates vary by region, the overall employment situation continues to improve."
But Takashi Omori, chief economist at UBS, said the rise could be more than a temporary blip. "The labour market tightness we have seen has peaked out," he said. "Labour market participation is expanding very rapidly."
That was not just a matter of women joining the workforce in increasing numbers, sometimes holding down more than one job at a time, he said. Baby boomers, who are this year reaching retirement age in record numbers, were not leaving their jobs, but instead signing new contracts at much lower wages.
According to Goldman Sachs, the number of employees is growing at an annual rate of 1.1 per cent.
The Bank of Japan has long assumed that more than five years of economic growth and record corporate profits would eventually push wages up and, by extension, consumption and prices. But wages have not budged and, in some cases, have fallen slightly.
Partly as a result, there has been little upward pressure on core consumer prices. The core consumer price index fell by 0.1 per cent in August from a year earlier, according to Friday's data, its seventh straight month of decline.
Economists at the BoJ and elsewhere had calculated that by now CPI would have begun to rise again following the impact of statistical quirks partly related to energy prices.
Prices of electronics, including flat-screen televisions, dropped sharply, while the cost of mobile phone use also fell after the introduction of special deals for new subscribers.
Seiji Shiraishi, chief economist at HSBC in Tokyo, said that a renewed fall in Tokyo prices indicated that nationwide CPI would fall by 0.2 per cent in September. "The BoJ will have to revise its core CPI forecast for fiscal 2007 from 0.1 per cent to zero," he said, referring to the biannual outlook report due to be published next month.
In better news, industrial production for August was stronger than expected, rising a seasonally adjusted 3.4 per cent from the previous month. That was partly the result of a catch-up in car manufacturing after an earthquake disrupted business at parts suppliers in July.
A slowdown in consumption also stopped, according to the household survey, which showed real consumer spending grew 1.6 per cent in August against the same month in the previous year. Retail sales grew 0.5 per cent, while spending on entertainment, leisure and education leapt 11.3 per cent.
TOKYO: Japan's jobless rate rose for the first time in 11 months as more people sought work, underlining concerns about the slow pace at which economic growth has translated into benefits for workers.
The unemployment rate rose 0.2 point to 3.8 per cent in August, while the job to job-seekers ratio deteriorated slightly from 1.07 to 1.06. The unemployment rate for women rose from 3.3 per cent to 3.7 per cent, according to official figures released on Friday.
Fukushiro Nukaga, finance minister, played down the significance of the rise, saying that a stronger economy was encouraging people, especially women, to seek work. "I heard that a growing number of female job seekers was behind the hike in jobless rate," he said. "Although unemployment rates vary by region, the overall employment situation continues to improve."
But Takashi Omori, chief economist at UBS, said the rise could be more than a temporary blip. "The labour market tightness we have seen has peaked out," he said. "Labour market participation is expanding very rapidly."
That was not just a matter of women joining the workforce in increasing numbers, sometimes holding down more than one job at a time, he said. Baby boomers, who are this year reaching retirement age in record numbers, were not leaving their jobs, but instead signing new contracts at much lower wages.
According to Goldman Sachs, the number of employees is growing at an annual rate of 1.1 per cent.
The Bank of Japan has long assumed that more than five years of economic growth and record corporate profits would eventually push wages up and, by extension, consumption and prices. But wages have not budged and, in some cases, have fallen slightly.
Partly as a result, there has been little upward pressure on core consumer prices. The core consumer price index fell by 0.1 per cent in August from a year earlier, according to Friday's data, its seventh straight month of decline.
Economists at the BoJ and elsewhere had calculated that by now CPI would have begun to rise again following the impact of statistical quirks partly related to energy prices.
Prices of electronics, including flat-screen televisions, dropped sharply, while the cost of mobile phone use also fell after the introduction of special deals for new subscribers.
Seiji Shiraishi, chief economist at HSBC in Tokyo, said that a renewed fall in Tokyo prices indicated that nationwide CPI would fall by 0.2 per cent in September. "The BoJ will have to revise its core CPI forecast for fiscal 2007 from 0.1 per cent to zero," he said, referring to the biannual outlook report due to be published next month.
In better news, industrial production for August was stronger than expected, rising a seasonally adjusted 3.4 per cent from the previous month. That was partly the result of a catch-up in car manufacturing after an earthquake disrupted business at parts suppliers in July.
A slowdown in consumption also stopped, according to the household survey, which showed real consumer spending grew 1.6 per cent in August against the same month in the previous year. Retail sales grew 0.5 per cent, while spending on entertainment, leisure and education leapt 11.3 per cent.