Japan’s jobless rate in September down for second month to 5.3 percent; prices keep falling

Japan jobless rate falls for second straight month

TOKYO — Japan’s unemployment rate fell for the second straight month as companies gained more confidence in the stimulus-fueled global recovery but prices continued to tumble, underscoring weak demand at home.

The jobless rate stood at a seasonally adjusted 5.3 percent in September, down from 5.5 percent the previous month and a record high of 5.7 percent in July, the government said Friday.

The figures suggest job losses in the world’s second-biggest economy are easing as companies gain more confidence that global demand for Japan’s cars, electronics and other mainstay exports is picking up. Japan’s factory output posted its seventh consecutive rise in September.

In another key indicator of labor trends, the ratio of job offers to job seekers in September edged up for the first time since May 2007 to 0.43 from 0.42. That means there were 43 jobs available for every 100 job seekers.

Still, the overall job market remains weak. The number of employed persons fell 1.5 percent from a year earlier to 62.95 million, according to the Ministry of Internal Affairs and Communications. The number of unemployed was 3.63 million, up 33.9 percent from the previous year.

A recent survey by Nikkei financial daily showed that major Japanese companies plan to hire 29 percent fewer graduates next spring than they did this year. The number of job offers as of Oct. 1 from export-reliant manufacturers tumbled by more than a third, down for the first time in six years.

At Hitachi Ltd., offers fell 30 percent after the company last year posted the biggest ever annual loss by a Japanese manufacturer. Suzuki Motor Corp. cut offers by 62 percent, according to the survey.

Goldman Sachs economist Chiwoong Lee said the worst is probably over but questions of sustainability linger.

“The external demand outlook is highly uncertain,” Lee said in a report. “Government policies in Japan and overseas should support production growth for the remainder of the year, but we still see risk of a fall in production when the policy boost fades.”

Prices also continue to tumble. The core consumer price index — a figure that excludes volatile fresh food prices — retreated 2.3 percent in September from the previous year. While the figure is slower than August’s record 2.4 percent decline, deepening deflation threatens to undermine Japan’s economic health.

“Today’s data confirmed that the deflationary trend has become decisive again, mainly because of deterioration in labor market conditions and wage declines,” said Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo.

Lower prices may seem like a good thing, but deflation can hamper growth by depressing company profits and causing consumers to postpone purchases, leading to production and wage cuts. It can also increase debt burdens.

The core CPI for Tokyo retreated 2.2 percent in October, pointing to more price falls ahead nationwide. Prices in the Japanese capital are considered an indicator of price trends across Japan.

As such, the central bank is unlikely to raise interest rates anytime soon. Japan’s key interest rate has remained at a super low 0.1 percent since December.

The Bank of Japan’s semiannual outlook report due out later Friday should offer economists more clues on overall policy direction.

A separate report showed that household spending rose a real 1 percent in September, missing market expectations for a 1.3 percent increase in a Kyodo news agency survey.

The figure had jumped 2.6 percent in August as consumers lured by government incentives snapped up eco-friendly home appliances and cars. But consumers may be growing cautious as the impact of those incentives wanes and a still-uncertain outlook for jobs and wages.

Average monthly household income slipped 0.1 percent from a year earlier to 422,120 yen ($4,600), the government said.

Household spending is a key barometer of individual spending, which accounts for more than half of Japan’s gross domestic product.