Household spending rebounds in Japan as confidence returns
The availability of jobs in Japan hit its highest level in 22 years last month as companies grew more confident about hiring, and household spending rebounded modestly, reinforcing expectations that economic recovery will resume in the third quarter without the need for additional stimulus from the central bank.
The jobs-to-applicants ratio rose to 1.1 last month from 1.09 in May, data from the Ministry of Health, Labour and Welfare showed yesterday, matching a high last seen in June 1992, shortly after the asset-inflation bubble burst, leading to years of stagnation.
The jobless rate unexpectedly rose to 3.7 per cent last month from 3.5 per cent in May, reflecting an increase in jobseekers responding to economic recovery. Labour shortages in the construction and retail sectors suggest the jobless rate is not likely to rise sharply.
Bank of Japan board member Koji Ishida said the impact of April's sales tax increase was likely to recede gradually.
"In order for household spending to stay firm, what's most important is that there is a heightening expectation that incomes will rise," Ishida said.
Household spending and retail sales data showed signs that consumption is recovering after the sales tax increase, supporting the bank's argument that domestic demand is strong enough to sustain growth and achieve its 2 per cent inflation goal.
Household spending rose 1.5 per cent last month from May in seasonally adjusted terms, reversing the contractions seen in April and May.
Retail sales fell 0.6 per cent year on year last month. The pace of decline was slower compared with 1997, when the sales tax was last raised, according to the Ministry of Economy, Trade and Industry.