WORLD> Asia-Pacific
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WORLD> Asia-Pacific
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Japan plans new stimulus, jobless rate at 3-yr high
(Agencies)
Updated: 2009-03-31 17:38 The yen slipped to 98.22 per dollar following the data, while stocks gave up early gains and fell 1 percent as investors awaited details of the stimulus plan.
"Unlike in the United States, where they had a new and popular administration announcing the measures, Prime Minister Aso is unpopular and many will be expressing scepticism about how effective the economic package will be," said Naoki Iizuka, senior economist at Mizuho Securities. Some analysts say unemployment may top 6 percent, with rising joblessness putting more political pressure on Aso ahead of the G20 summit in London on Thursday and an election later this year. "There's talk about the government issuing deficit bonds and that the government may announce a package with about 20 trillion yen in stimulus spending today," said Akira Maekawa, senior economist at UBS. "That may not be enough, but it's better than nothing." New Jobs Dry Up At the heart of Japan's problems is a halving of exports in the space of a year as demand in its key export markets slumps, leaving its big car and tech manufacturers scrambling to lay off staff, cut production and slash orders from their suppliers. The purchasing managers index, an early indicator of the health of the sector, showed Japanese manufacturing activity shrank for the 13th consecutive month in March, although not as deeply as in February. "Jobs data tends to lag economic activity ... and in this environment salaries will fall further. The outlook for consumption is pretty bad." said Yoshiki Shinke, senior economist at Dai-ichi Life Research Institute. Japan's jobless rate is still lower than the United States and the eurozone, but is the highest since early 2006. Analysts expect Japan's economy to keep shrinking in the first half of the year after contracting 3.2 percent in the fourth quarter, its fastest decline since the 1974 oil crisis and twice as fast as the US and euro zone. The Bank of Japan's tankan survey on Wednesday is expected to show sentiment among big manufacturers tumbled to the lowest since 1975, though tentative signs of recovery are emerging in the US and other key Asian export markets.
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