And Japan’s monthly report card for January was ruled off yesterday with unemployment remaining steady, deflation slightly easing, but consumer spending fall for a fourth straight month.
Industrial production remained solid, but down a bit from December, exports were solid as well and forecasts are now appearing suggesting the 4th quarter dip into negative growth (1.1% annual rate) will be reversed this quarter.
But growing political instability involving the DJP Government and its budget could derail the emerging economic rebound.
That is something definitely to watch in Australia’s second biggest export market.
The Bank of Japan last month upgraded its view of the economy for the first time in nine months thanks to better job growth, moderating deflation and strengthening output and exports.
Japan’s unemployment rate remained on 4.9% in January, but the ratio of jobs-to-applicants rose to its highest level since January 2009, a sign of developing demand for labour and economic recovery.
But average household spending fell 1.0% in January from a year earlier, following on from the 3.3% fall in December.
Spending by salaried employees was down 3.5% year on year, while wage earners cut their spending by 1.3%.
However, there was a 1% month on month rise in spending in January, double the market forecast.
The Japanese government of Prime Minister Naoto pushed through the lower house of parliament a budget bill for a record spending plan for the financial year starting April 1, but the continuing political deadlock (especially in the senate) threatens funding bills.
Industrial output rose for a third straight month in January, thanks to stronger overseas demand for cars and other exports.
Factory output climbed 2.4% from December, when it rose 3.3%; the Trade Ministry said.
Factory output rose 4.7% in January from the same month in 2010, led by increased demand for transport equipment, general machinery and metals, the Trade Ministry said.
This follows a 3.3% increase in December.
Retail sales rose 0.1% in January, beating economists’ forecasts for a 1.5% drop, another report from the trade ministry showed.
Consumer spending has been weak after the government scaled back a stimulus program for household appliances in December and in January, and is scheduled to end the incentives by March 31.
And Japan’s core consumer price index dropped 0.2% from a year earlier in January, marking the 23rd straight month of decline.
The CPI reading was down from the 0.4% contraction in December.
The government said the decline in January was predominantly attributed to lower prices for durable goods such as consumer electronics on sale in the post-holiday period and ongoing falls in high school tuition fees after state subsidies kicked-in last April.
But rising energy costs in Japan are now more of a worry, rising 0.7% in January from December.
Economists say the rise could be bigger for February after oil prices topped the $US100 a barrel mark.
