Japan's jobless rate hits lowest in 9 years
Saturday, September 1, 2007
JAPAN'S jobless rate hit a new nine-year low in July, keeping alive expectations that the Bank of Japan will soon raise interest rates despite data showing consumption and consumer prices are still weak.
Industrial production also fell in July, but that was largely due to an earthquake that disrupted car production, and the government said output was expected to bounce back in August.
Core consumer prices fell 0.1 per cent in July from a year earlier, the sixth straight month of decline, but analysts still expect a return to inflation in the last quarter of this year, opening the way for the BOJ to raise rates if markets stabilise.
"Within pure economic fundamentals, it looks quite supportive for the BOJ, " said Takehiro Sato, an economist at Morgan Stanley. "The domestic economy is in line with the BOJ's upbeat scenario: a moderate recovery of the economy with very stable prices.
"That said, the ongoing concerns about the global liquidity crunch might mean the BOJ won't be able to hike rates in September, and the next hike may be delayed until December at the earliest," he said.
Economics Minister Hiroko Ota said the data showed that Japan's recovery remains firm overall, but she was closely watching for any impact the US sub-prime mortgage woes might have on the real economy.
Financial markets showed little reaction to the data. In the Tokyo area, the core consumer price index, which excludes volatile fresh food prices, was flat in August against a consensus forecast of a 0.1 per cent decline.
Overall Tokyo CPI rose a seasonally adjusted 0.3 per cent from the previous month, the strongest rise in a year.
Many economists still expect consumer prices to start rising later this year, as a rebound in oil prices pushes up CPI growth.
"Tokyo CPI was a bit stronger than expected. So there may be the possibility that nationwide core CPI will hit zero in August, although it is in October that it will start rising clearly," said Takahide Kiuchi, chief economist at Nomura Securities.
Reuters
Industrial production also fell in July, but that was largely due to an earthquake that disrupted car production, and the government said output was expected to bounce back in August.
Core consumer prices fell 0.1 per cent in July from a year earlier, the sixth straight month of decline, but analysts still expect a return to inflation in the last quarter of this year, opening the way for the BOJ to raise rates if markets stabilise.
"Within pure economic fundamentals, it looks quite supportive for the BOJ, " said Takehiro Sato, an economist at Morgan Stanley. "The domestic economy is in line with the BOJ's upbeat scenario: a moderate recovery of the economy with very stable prices.
"That said, the ongoing concerns about the global liquidity crunch might mean the BOJ won't be able to hike rates in September, and the next hike may be delayed until December at the earliest," he said.
Economics Minister Hiroko Ota said the data showed that Japan's recovery remains firm overall, but she was closely watching for any impact the US sub-prime mortgage woes might have on the real economy.
Financial markets showed little reaction to the data. In the Tokyo area, the core consumer price index, which excludes volatile fresh food prices, was flat in August against a consensus forecast of a 0.1 per cent decline.
Overall Tokyo CPI rose a seasonally adjusted 0.3 per cent from the previous month, the strongest rise in a year.
Many economists still expect consumer prices to start rising later this year, as a rebound in oil prices pushes up CPI growth.
"Tokyo CPI was a bit stronger than expected. So there may be the possibility that nationwide core CPI will hit zero in August, although it is in October that it will start rising clearly," said Takahide Kiuchi, chief economist at Nomura Securities.
Reuters
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