The unemployment rate rose to 4.7 percent in July from 4.6 percent in June for the second straight month of deterioration amid the continuing aftermath of the March quake and tsunami, the government said Tuesday.
The number of jobless stood at 2.92 million, down 230,000 from a year earlier for the 14th consecutive down month, the Internal Affairs and Communications Ministry said in a preliminary report.
The jobless rate excludes data from the three prefectures hit hardest by the March disaster — Iwate, Miyagi and Fukushima — because of difficulty conducting the survey there.
The number of employed came to 59.73 million, down 200,000 from July 2010 for the first year-on-year decline in four months. It represented a decrease from 60.02 million in June.
Separate government data showed job availability improved, with the ratio of job offers to seekers rising to 0.64 in July from 0.63 in June. This means 64 jobs were available for every 100 people looking for work.
The export-driven economy has also been hit hard by the soaring yen. Deploying tools from the Bank of Japan’s monetary stimulus to a government-formed emergency loan program, authorities are seeking to counter the effect of an advancing currency that’s threatening to dampen growth.
Two quake-relief packages worth ¥6 trillion won’t be enough to keep the economy from contracting this year, economist David Rea said.
“The economy is fragile and a number of headwinds will drag on growth,” Rea, an economist at Capital Economics Ltd. in London, said before the report was released.
“A slowing global economy will compound the problems of exporters, who are already struggling with the effects of a strong yen,” he said.
The government unveiled a $100 billion program last week to help companies cope with the appreciating currency, which will channel funds from foreign exchange reserves to the Japan Bank for International Cooperation to aid exporters and spur purchases overseas.
A stronger yen makes Japanese goods more expensive in markets abroad and erodes exporters’ earnings abroad when repatriated back to the local currency.
Honda Motor Co. said it may revise its full-year profit forecast depending on the length of the U.S. market turmoil. Chief Financial Officer Fumihiko Ike told reporters Aug. 9 he is concerned the yen may strengthen to the low 70s against the dollar, further hurting the company.
Japan’s gross domestic product shrank for a third consecutive quarter in the three months that ended June 30 after the earthquake damaged exporters’ factories. GDP will probably drop 0.2 percent this year, marking “a full-year recession,” Rea said in a report Monday.
Household spending off
Average monthly spending by households fell a real 2.1 percent in July from a year earlier to ¥280,046 for the fifth consecutive monthly decline, the government said Tuesday in a preliminary report.
The Internal Affairs and Communications Ministry said the drop follows the termination of a government subsidy for purchases of environmentally friendly cars last September.
But spending other than related to cars was around the same as a year before and the decline is showing signs of halting, a ministry official said.
The figure is a key indicator for private consumption, which accounts for some 60 percent of GDP.
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