Japan Unemployment Exceeds All Estimates

Japan’s jobless rate surged by more than the predictions of 29 economists, adding pressure on the central bank to expand stimulus as Europe’s debt crisis deepens and gains by the yen impede the nation’s recovery.

The unemployment rate increased to 4.5 percent in October from 4.1 percent in September, the statistics bureau said today in Tokyo. That exceeded analysts’ median estimate of 4.2 percent and was the highest level in three months.

Panasonic Corp. and TDK Corp. are cutting jobs as a yen near a post World War II high against the dollar erodes profits and the nation struggles to recover from the March earthquake that left about 19,000 people dead or missing. Bank of Japan Governor Masaaki Shirakawa indicated yesterday that 55 trillion yen ($708 billion) of credit and asset-buying programs will be expanded if necessary.

“With the number of jobs in manufacturing falling, we’re already starting to see the impact of the global economic slowdown,” said Yoshimasa Maruyama, an economist at Itochu Corp. in Tokyo. In the event of any global financial crisis, “exports will fall off a cliff,” Maruyama said.

UBS AG today cut global growth forecasts for 2012 and the Australian government reduced estimates for that country. At the same time, Asian stocks rose on optimism that Europe’s crisis can be contained. The MSCI Asia Pacific Index gained 0.4 percent as of 12:03 p.m. in Tokyo.

South Korea, Australia
In a more positive sign for Japan, a separate report today showed retail sales rose 1.9 percent in October, more than the 0.7 percent median forecast of economists.

Across Asia, South Korea reported that its current-account surplus widened to a one-year high of $4.23 billion as imports weakened. Australia lowered its forecast for the nation’s economic growth to 3.25 percent through June 30, from 4 percent in May. It cut the projection through June 30, 2013, to 3.25 percent from a previous 3.75 percent.

In the U.S., data is due later on consumer confidence. In the U.K., government forecasts to be presented to Parliament may show Chancellor of the Exchequer George Osborne’s plan to reduce Britain’s budget deficit will come under pressure from an economy that is bordering on its second recession in three years.
In Japan, manufacturers shed 210,000 jobs in October from a year earlier, today’s report showed.

Panasonic’s Job Cuts

Panasonic is forecasting its biggest annual loss in 10 years and has accelerated plans to eliminate 17,000 jobs while TDK, the world’s biggest maker of magnetic heads for disk drives, may eliminate 11,000 jobs, about 12 percent of its workforce.

The yen traded at 78.18 per dollar as of 12:12 p.m. in Tokyo. It touched a postwar high of 75.35 on Oct. 31, prompting authorities to sell the yen in foreign-exchange markets for the third time this year.

Japan’s initial rebound from the March 11 earthquake and tsunami is fading, the OECD said in a report yesterday. At the same time, reconstruction work will help to support growth through the middle of 2012, it said.

A separate government report today showed that Japan’s job- to-applicant ratio failed to rise in October for the first time in five months. There were 67 positions open for every 100 candidates, the Labor Ministry said.
The economy, the world’s third biggest, expanded at an annual 6 percent pace in the three months ended September, ending a nine-month contraction. Economists surveyed by Bloomberg News expect growth to cool this quarter and moderate further next year.

Global Growth Estimates

UBS lowered its estimate for global growth next year to 2.7 percent from 3.1 percent as it forecast a euro area recession. UBS lowered its forecast for the U.S. to 2 percent from 2.3 percent and for China to 8 percent from 8.3 percent.

In the U.S., the Conference Board’s measure of sentiment may rise to 44 for November from 39.8, the lowest level since March 2009, according to economists’ median estimate. American real estate data, including the S&P/Case-Shiller index of property values in 20 cities, is also due to be released.

Growing doubts about the survival of Europe’s monetary union has caused global growth to stall and represents the main world risk, the OECD said yesterday.

In the U.K. estimates prepared by the Office for Budget Responsibility and due be presented to Parliament by Osborne at 12:30 p.m. local time, will show the economy expanding at a slower pace than the 1.7 percent rate seen eight months ago.

Government predictions will show that Osborne needs to borrow an extra 86 billion pounds ($133 billion) over the four fiscal years to April 2015 as growth forecasts are lowered to just under 1 percent this year and cut by more than half in 2012, according to a survey of 14 economists published by the Treasury this month.
The deteriorating outlook means Osborne may have to extend spending cuts, so that austerity continues during the first two years after the next general election due to take place in 2015.

“An even longer period of fiscal consolidation probably lies ahead,” Michael Saunders, chief European economist at Citigroup Inc. in London, said in a note. (Bloomberg)