Japan marked its 52nd straight month of expansion since February 2002, making this the second-longest period of growth of the postwar era, according to a government report released Tuesday.
In its economic report for May, the Cabinet Office said the economy is in a recovery — albeit a modest and fragile one — leaving its assessment unchanged for the third straight month.
Surpassing the expansion during the bubble economy period from December 1986 to February 1991, the current boom is approaching the longest ever — the 57 straight months of the so-called Izanagi boom from November 1965 to July 1970.
Although the recovery has been long and is gathering steam, it has yet to bring tangible benefits to many of those who have to live with lower incomes and a harsh job market.
And the pace of growth has been slow. Annual growth has been averaging 2.4 percent, compared with 11.3 percent during the Izanagi boom and 5.1 percent during the bubble economy.
The May report says exports are increasing in line with growing demand for general machinery in Asia and transport equipment in the United States.
It notes the employment situation is broadly improving, although some areas of weakness remain. Wages are slowly rising and the employment rate is high. It is however following a downward trend.
Hideo Kumano, chief economist at Dai-ichi Life Research Institute Inc., pointed to the report’s admission that the employment situation remains “severe” in some areas.
The period of “52 straight months, so far, is characterized by a jobless recovery in which employment and wages have hardly increased,” Kumano said, touching on the growing debate about a widening gap between rich and poor.
Therefore, it is important for the export-led recovery to spill over into domestic demand, and that ordinary salaried workers must feel that they are better off for the recovery to take hold, he said.
Dai-ichi Life Research estimates the economy grew by a total of 70.4 percent during the Izanagi boom and 24.9 percent during the bubble economy, but during the current expansion GDP had risen by only 9.8 percent by the end of last year.
Exports have grown 55.7 percent, but personal consumption has increased by only 6.7 percent, the institute said.
Meanwhile, companies have been busy restructuring while consumers have tightened their purse strings.
Kumano said the key from this point on is how to shore up domestic demand and allow more people to benefit from robust exports to the U.S. before they peak sometime after this summer.
The May report notes that the effect of record-high oil prices on the domestic and overseas economies needs to be closely monitored.
The economic recovery, supported by domestic private demand, is expected to continue, as resiliency in the corporate sector spreads to the household sector.
According to the report, personal spending is increasing moderately with consumer sentiment improving and incomes rising gradually.
Capital investment is rising in tandem with stronger corporate earnings and demand while industrial production is increasing modestly, although inventory adjustment continues in some sectors.
Corporate sentiment is improving despite lingering caution, the report says.