A recovery in Japan looks to be not only continuing, but spreading. Data for January that were published February 27 show gains in production, household spending and employment. Perhaps most notably, employment appears to be stabilizing after its cyclical decline that began in December 2000. The increase in January was a modest 70,000 but that followed December's 280,000. Although the unemployment rate edged up in January to 5.0%, it had fallen in December to 4.9%, the lowest since April 2001.

Workers' household spending, possibly bolstered by the improved employment conditions, had a sizable gain in January, 4.2%. These spending data are erratic and could easily retreat in the very next report, but even so, January had the strongest year-on-year performance since the autumn of 2002. Workers' real incomes showed the first year-on-year increase since March 2002.

Industrial production was up 3.2% in the month and 5.0% over the last 12 months. At 101.2 (2000=100), it was the highest since December 2000. Gains were widespread across industries.

All these reports come on the heels of the strong GDP report for the fourth quarter 2003, suggesting a broad-based recovery could be developing. Indeed, the important consumer sector might become more significant, as more stable employment conditions and less unemployment boost their spending.