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No.161(2014/6/18)
Economic and Labour Situation in Japan (June 2014)

In the first quarter of the year the Japanese economy grew by a strong 1.5% over the previous quarter and 5.9% year-on-year thanks to robust private-sector demand driven by increased consumer spending and capital investment.

The increase of domestic demand in the January-March period was due entirely to a last-minute surge ahead of the consumption tax hike from 5% to 8% implemented in April. Real capital spending jumped 4.9% over the previous quarter to record the largest rise in nine quarters.

Consumer spending also surged. Consumer spending on durable goods rocketed 13.7% over the previous quarter, largely due to increased demand for cars, air conditioners, refrigerators, and other expensive items prior to the tax hike.

Industrial Production
Japanese manufacturers scaled down the output they had boosted ahead of the consumption tax hike on April 1. As a result, industrial production in April decreased by 2.5% from the previous month for the first decrease in two months, although it was up 4.1% year-on-year. The index in April was 99.6 (seasonally adjusted).

Industries that mainly contributed to the decrease were as follows: (1) transport equipment, (2) electronic parts and devices, and (3) chemicals (excluding drugs), in that order.

Commodities that mainly contributed to the decrease were as follows: (1) large passenger cars, (2) solar battery cells, and (3) paleography printing (offset printing), in that order.

According to the Survey of Production Forecast in Manufacturing, production was expected to increase by 1.7% in May and decrease by 2.0% in June.

Family Income and Expenditure Survey in April
(1) Expenditure for Two-or-More-Person Households
The average monthly consumption expenditure per two-or-more-person household in April was 302,141 yen, down 0.7% in nominal terms and down 4.6% in real terms year-on-year.

(2) Income and Expenditure for Workers' Households
The average monthly income per household stood at 463,964 yen, down 3.3% in nominal terms and down 7.1% in real terms year-on-year.

The average consumption expenditure was 329,976 yen, down 3.1% in nominal terms and down 6.9% in real terms year-on-year.

Labour Force Survey Monthly Results
(1) Employment
The number of employed persons in April was 63.38 million, an increase of 260,000, or 0.4%, over the same month in the previous year.

(2) Unemployment
The number of unemployed persons in April was 2.54 million, a decrease of 370,000, or 12.7%, from the same month in the previous year.

The seasonally adjusted unemployment rate was 3.6%, maintaining the lowest level for six years for the fifth consecutive month.

(10,000 persons)
  April figures Change from previous year
      (%)
Population aged 15 years or over 11,079 –4 0.0
Labour force 6,592 -11 -0.2
Employed persons 6,338 26 0.4
Employees 5,548 18 0.3
Unemployed persons 254 –37 –12.7
Not in labour force 4,478 1 0.0
Labour force participation rate (%) 59.5 -0.1 -
Employment rate (%) 57.2 0.2 -
Unemployment rate, original series (%) 3.9 –0.5 -
  Current month Change from previous month
Unemployment rate, seasonally adjusted (%) 3.6 0.0 -

As the unemployment rate stayed at a low level, Japan's job availability improved in April to its best level in over seven years, suggesting that companies are keen to hire more workers amid the economic recovery. Job availability in April improved 0.01 points over the previous month, with the ratio of job offers to jobseekers standing at 1.08. This figure means that there were 108 jobs available for every 100 jobseekers.

Consumer Prices
The consumer price index in April was 103.1 (2010 = 100), up 2.1% over the previous month and up 3.4% over the same month of the previous year. Consumer prices surged 3.4%, the fastest pace since February 1991, as the April consumption tax hike lifted the prices of a broad range of items, leading to a 4.6% drop in household spending. Contributors to the rise included household durable goods, which surged 9.4%, as well as energy prices, such as gasoline and electricity, which rose 7.9%.

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