Wednesday, 2 March 2005

Hope for Japanese consumption

After the strong 2.1 percent jump in industrial output in January, Japan yesterday reported that January unemployment was at 4.5 percent while household spending was up 2.6 percent for the first rise in three months and compared with expectations for a fall of 1.2 percent.

The January unemployment rate was the lowest level since January 1999. The number of unemployed people was 2.96 million in January, down 270,000 from a year ago, marking the 20th straight monthly decline.

The government had also reported on Monday that retail sales in January rose at the fastest pace in more than six years and that housing starts increased at twice the expected rate.

"Given the easing in the pressures (on employment from corporate) restructuring and improving labour and wage conditions, which were confirmed by today's announcements, private consumption is unlikely to see a serious decline ahead," Osamu Katano, an economist at Mizuho Securities, was quoted as saying.

In December, Andy Xie had said on CNBC that Japanese consumer spending is "an eternal dream". Well, that dream may yet come true.

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