Japan's jobless rate steady, but prices fall


Japan's jobless rate was steady in April

Staff and wires

TOKYO, Japan -- Japan's jobless rate held steady in April at 5.2 percent, slightly better than expected.

But consumer prices fell for a 31st straight month, with government figures released Friday showing the nationwide core consumer price index (CPI) fell 0.9 percent in April from a year earlier,

That underscores the task the world's second-largest economy faces in curbing deflation and getting its 126 million consumers to spend more.

Along with deflation, lackluster consumer spending and a jobless rate that is still close to December's record postwar level of 5.5 percent, the Japanese economy is weighed down by corporate failures, mammoth bad loans in the banking system, and political resistance to much-needed structural reforms.

Tokyo-based Jeffrey Young of Nikko Salomon Smith Barney told CNN Friday that Japan's reforms were not deep enough or rapid enough to bring down debt levels.

Still, there are some glimmers of hope.

Growth in March quarter

After three straight quarters of contraction to the end of 2001, the economy is thought to have grown strongly in the March quarter, with some private think tanks suggesting an annual rate of almost 9 percent.

The official figure will be released next month.

As well, industrial output is up and Japanese exports are rising on the back of a global economic recovery.

"It's a sign that the cycle is starting to turn," Richard Jerram, chief economist at ING in Tokyo, told Reuters. "The job offer ratio improved for the second month, and that's usually a fairly reliable measure of market conditions."

In the equities market, overseas investors have been buying millions of dollars worth of stock in Japan, data put out by the Ministry of Finance showed on Thursday.

Still, in the face of tough competition, many Japanese companies have been forced to abandon their traditional employment systems.

Job cuts

Japan's top five chipmaking conglomerates, for instance, including Mitsubishi Electric Corp, NEC Corp and Fujitsu Ltd, cut nearly 70,000 jobs in the fiscal year that ended in March.

Economists expect continued sluggishness in job and income conditions to constrain consumer spending, which accounts for 55 percent of Japan's economic activity.

Hitachi Ltd, Japan's biggest electronics maker, said on Thursday it had resumed production of chips used in liquid crystal displays (LCDs) in a domestic plant due to rebounding demand for LCD drivers used in cellular phones and computers.

Sharp Corp and Toshiba Corp have made similar moves.