Bloomberg News

Japan’s Unemployment Rate Unexpectedly Fell to 4.5% in May

June 30, 2011

(Updates with economist’s comment in the fourth paragraph.)

July 1 (Bloomberg) -- Japan’s unemployment rate unexpectedly declined in May as more people stopped looking for work after the nation’s largest earthquake on record.

The jobless rate fell to 4.5 percent in May from 4.7 percent in April, the statistics bureau said in Tokyo today. The median forecast of 31 economists surveyed by Bloomberg News was for the jobless rate to rise to 4.8 percent.

The decline in the unemployment rate may be masking the weakness of the economy because it doesn’t include data from areas affected by the March 11 disaster, according to economist Yoshiki Shinke. Wages have slid since the disaster and a separate report today showed that household spending fell 1.9 percent last in May, pointing to weaker consumer spending.

“Employment conditions have been deteriorating gradually since the earthquake,” Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo, said before the report. “The actual state of the job market is probably worse than the number suggests” given that hiring in disaster areas aren’t included in the data, he said.

Payrolls fell by 100,000 people, the third monthly decline, today’s report showed. Ricoh Co. said this week it plans to cut 1,600 jobs through October to save costs.

Signs are emerging that consumer spending is recovering after the natural disaster, a factor that may aid the job market. Retail sales fell 1.3 percent in May, less than estimated, and household sentiment has rebounded from a two-year low.

“We’re expecting an economic recovery going forward, increasing the chances that job cuts won’t become of a large scale,” Dai-Ichi Life’s Shinke said. “Further advances in the unemployment rate will probably be limited.”

--With assistance by Minh Bui and Theresa Barraclough in Tokyo. Editors: Lily Nonomiya, Ken McCallum

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To contact the reporter on this story: Lily Nonomiya in Tokyo at lnonomiya@bloomberg.net; Aki Ito in Tokyo at aito16@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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