Japan's Industrial Output Jumps Most in 56 Years
Japan’s industrial production jumped at the fastest pace in 56 years in April, with predictions for further gains in May and June — convincing signs that manufacturers are recovering from the country’s steepest recession since World War II.
But the pain continues to deepen for workers, families and the thousands of non-manufacturers who employ 70 percent of the country. The jobless rate rose to 5 percent, the highest in nearly six years, while household spending and consumer prices declined.
Industrial output jumped 5.2 percent in April from the previous month, rising for the second straight time, the government said Friday. Companies making electric parts, chemicals and transport equipment posted particularly strong gains.
The result beat the 3.2 percent increase forecast in a Kyodo news agency survey and marked the biggest increase since March 1953, when the figure rose 7.9 percent.
Hit by an unprecedented slowdown in global demand late last year, Japanese manufacturers have responded aggressively by slashing production and jobs in an effort to lower costs and trim stockpiles.
Inventory levels in April declined 2.7 percent in April, according to the Ministry of Economy, Trade and Industry.
Their outlook is bullish as well. Manufacturers expect production to soar 8.8 percent in May and 2.7 percent in June due to brightening prospects for a recovery in global demand. Trade data Wednesday showed that Japan’s export slump is slowing, and the central bank modestly upgraded its economic assessment last week.
“Industrial production shows signs of an upward movement,” the ministry said, upgrading its assessment from “sluggish” in March.
The cost cuts that have benefited companies, however, are taking a greater toll on workers and families in the world’s second-biggest economy.
The country’s unemployment rate rose to 5 percent in April. The result marks the highest reading since 2003 and an increase from 4.8 percent in March.
The total number of jobless people climbed by 710,000 from a year earlier to 3.46 million, the Ministry of Internal Affairs and Communications said. Those with employment fell by 1.7 from the previous year to 63.22 million.
Chiwoong Lee, an economist at Goldman Sachs in Tokyo, predicts unemployment will rise to record levels and hit 6 percent by the end of 2010. He warns that weak consumption and expanding job losses could reverse the recovery in industrial output later this year.
“Since unemployment is a lagging indicator…further deterioration seems to be in store as the current real economy is reflected,” he said.
The worsening labor conditions resulted in cautious consumers who reduced family budgets and spent less at stores. Household spending fell 1.3 percent in April from the previous year, the government said a day after it released other data showing retail sales dropped 2.9 percent in the month.
Household spending is considered a key indicator of individual consumption, which represents more than half of Japan’s economy.
Separately, the government said prices fell in April. The nation’s core consumer price index, which excludes volatile fresh food prices, declined 0.1 percent.
The core CPI for Tokyo retreated 0.7 percent in May, suggesting that prices nationwide will fall further. Prices in the nation’s capital are considered a leading barometer of price trends across Japan.
5/28/2009 11:34 PM TOKYO (AP)