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Economy in Brief

More Favorable Data From Japan
by Louise Curley March 2,2010

So far releases of January activity in Japan suggest continued good growth for the economy as a whole in the first quarter.  Last week, foreign trade and industrial production reports were positive and today's employment and workers' household spending data are further evidence of increased good news for Japan.  

The unemployment rate in Japan fell to 4.9% from 5.2% in December largely as a result of an almost unprecedented increase of 540 million jobs.  One has to go back to October 1973, to find a higher monthly increase in jobs. The changed in the number of employed persons represents the changes in jobs and is shown in the first chart.  The rise in Active Openings/Applications, though small, is encouraging as this measure is thought to be a good indication of future employment.  (Active Openings/Applications,  [email protected],  is found in Employment Referral Statistics in Haver's Japan data base.)  

Japan's 4.9% unemployment rate compares with 9.7% in the United States and 9.9% in the Euro Area.  Japan's tradition of lifetime employment has tended to keep its unemployment rate low relative to American and European standards, but the lifetime employment commitment is beginning to erode and many Japanese firms find they are overstaffed.  As a result further dramatic increases in jobs may be limited.  

Disposable income in Workers' Households increased 3.4% in January from December.  Although the increase in living expenditures was only 0.42%, it was larger than the 0.31% increase in December.  But with the larger increase in income than in expenditures, the propensity to consume of these households declined 2.1 percentage points from 75.6% in December to 73.5% in January.  The propensity to consume has shown considerable volatility, but within a fairly narrow range from 68.7% to 77.5% since January 2000 when the data first became available.  The propensity to consume since 2001 is shown in the second chart.

JAPAN Jan 10  Dec 09 Jan 09 M/M Chg Y/Y Chg 2009 2008 2007
Employed Persons (1000) 63030 62490 63830 540 -800 62820 63850 64120
Unemployed Persons  (1000) 3280 3440 2810 -160 470 3360 2650 2570
Unemployment Rate (%) 4.9 5.2 4.2 -0.3 0.7 5.1 4.0 3.8
Active Openings/Applications (ratio) 0.46 0.43 0.65 0.3 -0.19 0.48 0.88 1.04
Workers' Households        
Disposable Income (2005=100) 97.3 94.1 99.1 3.40% -1.82% 97.0 99.9 99.8
Living Expenditures (2005=100 96.3 95.9 97.2 0.42% -0.93% 96.9 98.7 98.5
Propensity to Consume (%) 73.5 75.6 72.8 -2.1 0.7 74.2 73.4 73.3
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