Japan's jobless rate falls to nine-year low

29-05-2007

Japan's jobless rate falls to nine-year low
Unemployment in Japan unexpectedly fell to a nine-year low in April, sparking further speculation that interest rates will rise in the Asian market.

The proportion of jobless people fell to 3.8 per cent last month, having consistently remained at four per cent over the previous five.

A total of 2.68 million Japanese citizens were unemployed in April, a decrease of 5.6 per cent on the same period in the previous year, Japan's statistics bureau said.

Welcoming the data, the country's economics minister Hiroko Ota said: "The number of employed and salaried employees rose while the number of unemployed fell, which is a good sign."

Analysts are now widely predicting that the Bank of Japan will raise interest rates in August, a move made more likely following the publication of separate figures today showing a larger-than-expected jump in household spending levels.

Overall household spending increased by 1.1 per cent in April compared to a year earlier in price-adjusted real terms, against average forecasts of a 0.2 per cent rise.

The emergence of lower unemployment and apparent increase in consumer spending has led some analysts to predict that current conditions could spark higher wage demands and drive inflationary pressures.

If such a pattern develops, the Bank of Japan is likely to raise the benchmark rate of interest in the country – which currently has the lowest interest rates of any industrialised nation.

However separate figures released by the Japanese government show a 0.6 per cent fall in retail sales in the country during April, leading some commentators to warn that the current economic situation is far from certain.

"The monthly data on unemployment is quite volatile, so we have to be careful about taking too many implications from one month's data," said Kiichi Murashima from Nikko Citigroup.



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