| BUSINESSWEEK ONLINE : NOVEMBER 15, 1999 ISSUE | ||||||||
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| BUSINESS OUTLOOK
Japan: The Recovery Isn't Catching Fire Although the government tried to put a favorable spin on the data, Japan's latest employment numbers showed little real improvement. And a weak labor market is keeping the recovery in the world's second-largest economy from becoming widespread. Japan's jobless rate dropped for the second month in a row, slipping to 4.6% in September from a record high of 4.9% in July. The ratio of jobs to applicants also looked better, rising to 0.47 in September from 0.46 in August. The Economic Planning Agency pointed to the decline in the jobless rate as a sign that ''employment conditions are improving.'' But look again. Both labor-market indicators improved because 60,000 workers dropped out of the labor force. Jobs in September fell by 40,000 as manufacturing continued to lay off more workers. That weakness, however, is a result of Corporate Japan's painful struggle to streamline operations in order to compete in global markets. Industrial activity is actually rebounding, helped by stronger export growth and by bringing inventories into better alignment with demand. But instead of hiring workers, factories are extending overtime. Elsewhere in the economy, tax incentives have stimulated the construction sector. Housing starts in the third quarter were up 6.9% from a year earlier (chart). Better industrial and construction data suggest that real gross domestic product grew at an annual rate above 2% in the third quarter, following a 0.9% advance in the second quarter. Less than half of last quarter's growth, though, likely came from consumers, whose spending accounts for two-thirds of Japan's GDP. In September, wage earners' spending fell a steep 3.7% from a year ago, and salaried workers' purchases were down 1.7%. For the entire third quarter, real consumer spending likely rose less than 1%, after growing at a 3.4% annual rate in the second quarter. Despite the upturn in manufacturing, Japan's recovery won't be a sure thing until consumer spending is on firmer ground. By JAMES C. COOPER & KATHLEEN MADIGAN _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS Japan: The Recovery Isn't Catching Fire CHART: Tax Incentives Are Lifting Homebuilding INTERACT E-Mail to Business Week Online | |||
