Japan’s industrial production decreased and the unemployment rate unexpectedly climbed in October, lifting bond prices and providing early signs that the country’s economy will likely shrink this quarter.
Factory output declined 1.8 percent from September, the sharpest drop since February 2009, the Trade Ministry said in Tokyo today. The jobless rate increased to 5.1 percent from 5 percent and the economy lost 180,000 jobs from a year earlier, the most since May, according to the statistics bureau.
The figures add to evidence that Japan’s economy may contract for the first time in five quarters, weighed down by the expiration of government stimulus measures and weak exports. While the economy may pick up next year, the Bank of Japan will likely continue to face pressure to keep monetary policy easy as demand remains sluggish.
“This quarter and the next will be the bottom for the economy,” said Takuji Aida, a senior economist at UBS AG in Tokyo. “This quarter we’ll see a contraction, and next quarter we’ll see growth around 1 percent. After that, we still won’t see anything strong, but we’ll see a gradual acceleration of growth.”
Japan’s real gross domestic product is expected to shrink at a 0.9 percent annualized pace in the three months through December, according to a survey of 42 economists by the Japanese government-affiliated Economic Planning Association.
Bonds Rise
Yields on Japan’s five-year government debt fell two basis points to 0.44 percent as of 9:55 a.m. in Tokyo after the release of the figures. The yen traded at 84.23 against the dollar at 10:17 a.m. in Tokyo, little changed from 84.27 before the unemployment report was released. The currency has gained more than 10 percent this year, threatening the value of companies’ overseas earnings.
Figures released last week showed exports grew at the slowest pace this year. Toyota Motor Corp. is among automakers scaling back output after a government subsidy program for fuel- efficient cars
ended in September, a factor that together with a stronger yen threatens profits.
Industrial production fell for a fifth month in October, after decreasing 1.6 percent in September. The median estimate of 25 economists surveyed by Bloomberg News was for a 3.2 percent decline.
Consumers rushed to buy vehicles before the end of the government’s subsidy program, helping the nation’s economy grow at a 3.9 percent annual pace last quarter.
Auto Output Falls
Toyota Motor, the world’s biggest automaker, said last week that its domestic vehicle production fell for a second month in October. Honda Motor Co. and Nissan Motor Co., Japan’s second and third largest automakers, also cut their domestic output.
Japan’s shipments of rolled-aluminum products increased at a slower pace last month than September as demand from the auto industry weakened after the government ended the subsidy program.
Exporter earnings are also under threat from the yen’s appreciation. Nikon Corp., the Japanese maker of cameras, lenses and chip-making equipment, this month cut its full-year operating profit and revenue forecasts, citing a stronger yen. The company revised its assumptions for the currency’s exchange rate to the dollar to 80 yen for the six months from Oct. 1, from 90 yen projected three months ago.
More Jobs
In one encouraging sign for hiring, there were 93 newly advertised jobs in October for every 100 people who started looking for work that month, the most since 2008, the Labor Ministry said in a separate report today. Economists consider it a leading indicator for employment. The job-to-applicant ratio climbed to 0.56, meaning there were 56 job openings for every 100 candidates.
As for production, manufacturers said they plan to increase output 1.4 percent in November and boost production 1.5 percent in December, a government survey included in today’s report showed.
The Japanese parliament passed on Nov. 26 an extra budget to fund a stimulus package aimed at fighting deflation and combating the stronger yen. To foster growth, the Bank of Japan last month cut its benchmark interest rate and created an asset- purchase fund.
No comments:
Post a Comment