Japan’s stocks up (a little), unemployment up, and household spending down

January 30, 2007
By Ken Worsley

Some things went up in Japan today: Unfortunately, data showed the unemployment rate rising to 4.1% in December, and slightly fortunately, the Nikkei stock index rose 19.43 points, or 0.11%, to finish at 17,490.19 points on the Tokyo Stock Exchange.

Data released on Tuesday showed the twelfth consecutive month of year-on-year decline in household spending, with a fall of 1.9% compared with December 2005.

Industrial production, on the other hand, was up by 0.7%, as reported by the Ministry of Economy, Trade and Industry in a preliminary report. Previous forecasts from Dow Jones Newswires and Nikkei had projected only a 0.2 percent increase, which led many to feel upbeat about the state of corporate Japan, although the Ministry has projected that this figure will fall by 2.8% once the January data rolls in.

As Bloomberg points out, wages grew 0.1 percent in the third quarter of last year, while average corporate profits increased 15.5 percent.

Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. and a former central bank official, had projected that the Bank of Japan would increase the benchmark interest rate at the close of its next meeting, on February 21st. But today he had this to say about the possibility of a February rate increase:

Today’s data were a bit of a disappointment from the Bank of Japan’s point of view. If tomorrow’s wage report shows more weakness, we’ll change our call.

It still seems early to be making calls (unless you’re just looking for interviews with a wire service, in which case, call away). I think I’ll make mine on Vanentine’s Day…

No, make that groundhog day. I’m making my call on the February BOJ meeting on groundhog day, February 2nd.

By the way, what did members of the Japanese government have to say about today’s economic news?

Finance Minister Hiroko Ota:

I don’t see the employment environment deteriorating…Spending on clothes has declined due to the impact of the warm winter but I don’t have the impression that spending in general is getting worse.

Deputy Chief Cabinet Secretary Hakukbun Shimomura: