Japan Unemployment Rate Unexpectedly Rises, Prices Fall Further

Japan’s unemployment rate unexpectedly increased in April and the decline in consumer prices deepened, signaling that domestic demand is restraining the nation’s recovery from its deepest postwar recession.

The jobless rate rose to 5.1 percent from 5 percent, the statistics bureau said today in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for no change. Prices excluding fresh food slid 1.5 percent from a year earlier after dropping 1.2 percent in March.

The reports come a day after government figures showed a sustained rebound in exports, driven by demand from Asia’s emerging economies, and highlight Japan’s reliance on trade to sustain growth. The export revival hasn’t been strong enough to spur hiring that would in turn boost household spending, which unexpectedly fell in April, today’s data showed.

“It’ll probably take until next fiscal year for companies to step up hiring,” Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo, said before the reports.

The Nikkei 225 Stock Average has tumbled 12 percent this month on concern that the European sovereign debt woes may derail the global recovery. It rose 1.5 percent at 9:08 a.m. in Tokyo as China’s commitment to investing in Europe allayed concern the crisis will worsen. The yen traded at 90.99 per dollar from 90.98 before the reports.

Household spending dropped 0.7 percent in April from a year earlier, the bureau said. The median estimate of economists surveyed was for a 2.5 percent increase. Retail sales rose 4.9 percent from a year earlier, led by gas stations and auto showrooms.
By Aki Ito Bloomberg