Japan Sees Economy 'Picking Up' Even as Jobs Lost
Sept. 8 (Bloomberg) -- Japan’s economy is recovering fromits worst postwar recession, the government said, keeping itsassessment unchanged for a second month even after the joblessrate climbed to a record.
“The economy is showing signs of picking up amid recordunemployment and other difficult conditions,” the CabinetOffice said in Tokyo today, adding language about joblessness tophrasing it’s used since July. The report, the first since theDemocratic Party of Japan won power on Aug. 30, cited overseasdemand as the driver of the recovery.
Although growth resumed last quarter, the economy has onlyrebounded to its 2004 size and factory output is still almost aquarter below last year’s level. Saddled with idle equipment andunneeded workers, companies are cutting investment and jobs.
The unemployment rate climbed to 5.7 percent in July, thehighest since records began in 1953. The increase was areflection of low production levels, the government said.
The Cabinet Office downgraded its view of the job market,saying there’s a risk confidence may deteriorate amonghouseholds, whose spending accounts for about 60 percent of theeconomy. A separate report today showed that sentiment amongmerchants fell in August for the first time in eight months.
The world’s second-largest economy grew an annualized 3.7percent last quarter, following a record 11.7 percentcontraction in the previous three months, economists expectrevised gross domestic product figures to show on Sept. 11.Exports led the expansion as governments worldwide poured morethan $2 trillion into their economies.
Global Recovery
Economic and Fiscal Policy Minister Yoshimasa Hayashi toldreporters after the Cabinet Office release that economicconditions remain critical, with falling incomes and consumerspending risk factors.
The global recession is bottoming, the government saidtoday, raising its assessment of the world economy for a thirdmonth. China’s 4 trillion yuan ($585 billion) in public spendingis helping generate demand in an economy that this year passedthe U.S. as Japan’s biggest export customer.
Hayashi said policies haven’t spurred consumer demand.
Job prospects have worsened and workers are enduring thebiggest pay cuts on record.
Still, government incentives to encourage the purchase offuel-efficient cars boosted domestic revenue for companiesincluding Toyota Motor Corp., whose sales of its Prius hybridalmost quadrupled in July.
The automaker said today it will hire about 800 temporaryworkers to meet “possible” production increases as governmentsubsidies at home and abroad revive sales. Toyota still plans tobuild about a third fewer cars this year than the 10 millionvehicles it has the capacity to make.
To contact the reporter on this story:Jason Clenfield in Tokyo at jclenfield@bloomberg.net
Last Updated: September 8, 2009 06:33 EDTSource: Bloomberg
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