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Economy in Brief

More Japanese Labor Data Extend Mixed  Improvement
by Carol Stone April 30, 2004

A couple of weeks ago, we commented on Japanese industry employment data that showed some improvement through February, although the gain was narrowly focused on the service sector. Today, the comprehensive labor force survey for March, along with separate wage and hour data, shows a similar pattern of scattered advance.

Improvement in the unemployment picture is unequivocal. The rate dropped from 5.0% in February to 4.7% in March, the lowest since March 2001. This accompanied a rise in total employment of 0.3% from February. However, while unemployment rate is well down from its peak of 5.5% in early 2003, employment seems not to have much of a growth trend in place yet.

A good sign of promise is contained in the hours data. This is a separate survey of companies with 5 or more employees conducted by the Ministry of Health, Labor and Welfare. Hours worked at these companies surged in March by 4.2% to 102.2, the highest level since May 1997, nearly seven years ago. But other results of that survey are not as strong, as cash earnings for March actually fell. This could suggest that jobs growth is in lower-paying sectors or positions.

Thus, despite the better look of some of the labor market data, household spending has yet to respond definitively. In data for March also released today, workers' household expenditures decreased 6.7%, more than erasing the gains in January and February. Several of these measures, then -- employment, earnings and spending -- look to be forming a base toward expansion, but are not yet climbing with any resolve.

Selected Indicators for Japan Mar 2004 Feb 2004 Jan 2004 Year Ago 2003 2002 2001
Employment* (millions)  63.40 63.21 63.22 63.28 63.17 63.30 64.10
  % Change +0.3 -0.0 +0.1 +0.2 -0.2 -1.2 -0.6
Unemployment Rate* (%) 4.7 5.0 5.0 5.4 5.3 5.4 5.0
Hours Worked** (2000=100) 102.2 98.1 99.4 97.8 98.0 98.0 99.0
Cash Earnings** (2000=100) 93.5 96.5 96.2 96.0 95.2 96.0 98.7
Workers' Household Spending* (2000=100) 94.4 101.2 98.4 95.0 95.6 97.0 98.3
  % Change -6.7 2.8 4.1 -0.6 -1.5 -1.3 -1.7
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