Japan’s economy sends mixed signals


AFP

TOKYO — Japan’s jobless rate rose unexpectedly last month while consumer prices dipped and industrial output rebounded, data showed Friday, painting a mixed picture of the health of Asia’s largest economy. Overall the slew of indicators kept analysts cautiously optimistic that Japan’s economy can continue its gradual recovery from a slump stretching back over a decade, despite its contraction in the second quarter.

But stubborn deflationary pressure will make it harder for the central bank to justify another interest rate hike yet, particularly after recent financial market turmoil, economists said.

The latest data “showed Japan’s economy is still recovering steadily,” said Makoto Ishikawa, an economist at Japan Research Institute.

“But we also need to look at more indicators to confirm the strength of the economy,” said Ishikawa.

Japan’s jobless rate rose to 3.8 percent in August from a nine-year low of 3.6 percent the previous month, the government said.

Even so spending by Japanese households rose 1.6 percent from a year earlier in August, the first rise in two months.

Industrial output, meanwhile, rose by 3.4 percent in August from the previous month, better than market expectations for an increase of 3.2 percent after a dip in July when an earthquake hit automobile production.

The trade and industry ministry predicted output in September would fall 0.8 percent from August before expanding 4.1 percent in October.

“Manufacturing is already showing clear improvement,” noted Morgan Stanley economist Takehiro Sato, who now expects the Japanese economy “to pull out of its summer doldrums.” Although Japan’s unemployment rate rose last month, the total number of unemployed declined by 230,000 from a year earlier to 2.49 million in August. Japan’s core consumer prices, meanwhile, fell by 0.1 percent in August from a year earlier as the world’s second largest economy struggles to shake off stubborn deflationary pressures.

The core consumer price index for Tokyo alone in September — seen as a leading indicator for national price trends — also dipped by 0.1 percent.