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No.154(2014/3/13)
Economic and Labour Situation in Japan (March 2014)

Japanese Economy Grows ahead of Consumption Tax Hike
The nation's industrial production in January registered the highest growth since 2011, indicating that the economy is strengthening as a looming consumption tax hike stimulates last-minute demand. Inflation also matched the highest level in more than five years, with consumer prices (excluding fresh food) climbing 1.3% over a year earlier.
Economic growth is expected to surge in this quarter as consumers and businesses splurge ahead of the consumption tax rise in April, when the tax rate will increase from the current 5% to 8%.
Economic and Fiscal Policy Minister Akira Amari remarked that Japan has yet to exit from 15 years of deflation.
Surging production of transport equipment and machinery helped to drive output to its biggest gain since June 2011. Household spending jumped 1.1% over a year earlier, and retail sales rose 4.4% over a year earlier, the most for the month of January in data going back to 1980 and the largest January rise since April 2012.
The job market showed further signs of improvement, which could begin to support wages and help households deal with the higher consumption tax rate and inflation.
Attention from now on will focus on the extent to which the Japanese economy contracts after the tax hike in April.

Industrial Production
Industrial production continues to show an upward movement. In January industrial production increased by 4.0% over the previous month, registering a rise for the second consecutive month and up 10.6% year-on-year. The index in January was 104.1 (seasonally adjusted).
Industries that mainly contributed to the increase were as follows: (1) transport equipment, (2) general-purpose, production, and business-oriented machinery, and (3) chemicals (excluding drugs), in that order.
Commodities that mainly contributed to the increase were as follows: (1) large passenger cars, (2) semiconductor products machinery, and (3) drive, transmission, and control parts, in that order.
According to the Survey of Production Forecast in Manufacturing, production was expected to increase by 1.3% in February and decrease by 3.2% in March.

Family Income and Expenditure Survey in January
(1) Expenditure for Two-or-More-Person Households
The average monthly consumption expenditure per two-or-more-person household in January was 297,070 yen, up 2.8% in nominal terms and up 1.1% in real terms year-on-year.
(2) Income and Expenditure for Workers' Households
The average monthly income per household stood at 438,646 yen, up 1.1% in nominal terms and down 0.6% in real terms year-on-year.
The average consumption expenditure was 325,804 yen, up 1.5% in nominal terms and down 0.2% in real terms year-on-year.

Labour Force Survey Monthly Results
(1) Employment
The number of employed persons in January was 62.62 million, an increase of 340,000, or 0.5%, over the same month in the previous year.
(2) Unemployment
The number of unemployed persons in January was 2.38 million, a decrease of 350,000, or 12.8%, from the same month in the previous year.
The seasonally adjusted unemployment rate was 3.7%, maintaining the lowest level for six years for the second consecutive month.

(10,000 persons)
  January figures Change from previous year
      (%)
Population aged 15 years or over 11,084 -6 -0.1
Labour force 6,501 -1 0.0
Employed persons 6,262 34 0.5
Employees 5,548 46 0.8
Unemployed persons 238 -35 -12.8
Not in labour force 4,579 -4 -0.1
Labour force participation rate (%) 58.7 0.1 -
Employment rate (%) 56.5 0.3 -
Unemployment rate, original series (%) 3.7 -0.5 -
  Current month Change from previous month
Unemployment rate, seasonally adjusted (%) 3.7 0.0 -

According to a separate report released by the Ministry of Health, Labour, and Welfare, job availability in January improved 0.01 points over the previous month, with the ratio of job offers to jobseekers standing at 1.04. This figure means that there were 104 jobs available for every 100 jobseekers.

Consumer Prices
The consumer price index in January was 100.7 (2010 = 100), down 0.2% from the previous month and up 1.1% over the same month of the previous year.

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