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Japan jobless rate falls, prices rise, but no quick rate hike seen

Japan jobless rate falls, prices rise, but no quick rate hike seen

Japan's jobless rate fell slightly and prices edged up in November, the government said Tuesday, but a drop in consumer spending suggested a quick interest rate hike was unlikely.
Japan's unemployment rate for November dropped to 4.0 percent from 4.1 percent a month earlier, the government said. The total number of jobless fell by 330,000 to 2.59 million for the 12th consecutive month of declines.
The ratio of job offers to job seekers, an indicator of demand for labor, stood at 1.06 in November, unchanged from the previous month.
The nationwide core consumer price index, meanwhile, rose 0.2 percent on year in November, the government said, registering the sixth straight month of increases.
The results, which exclude volatile food prices, outpaced the 0.1 percent growth in the previous month, according to the data released by the Ministry of Internal Affairs and Communications.
The government took the news as a sign the world's second-largest economy was on a stable recovery path.
"The CPI figures show sustainability," Chief Cabinet Secretary Yasuhisa Shiozaki said. "We are able to confirm our view that the end of deflation is in sight."
But household spending for November dropped 0.7 percent on year, improving from a 2.4 percent fall in October and slightly better than a 1.5 percent drop expected by economists. Spending by Japanese households headed by wage earners dropped 1.3 percent in November in real terms from a year earlier.
Those numbers suggested a lack of growth in paychecks is enforcing limits on consumption, the biggest chunk of the economy _ and a weak spot that economists say must be bolstered in order to keep the recovery going.
"Wages have been sluggish. We need to carefully watch their movements," said Hiroko Ota, state minister in charge of economic and fiscal policy.
Market players were closely monitoring the CPI and household spending data as Bank of Japan Governor Toshihiko Fukui last week toned down his usually bullish assessment of the economy by admitting that personal spending and consumer prices remain weak. His comments reduced market expectations that the central bank will lift interest rates in January.
The data on Tuesday were unlikely to revive expectations that the central bank will conduct a small interest rate hike in January, especially at a time when sluggish consumer spending is slowing overall economic growth and is effectively keeping a lid on inflation, BOJ watchers said.
"These data won't push the BOJ," said Seiji Shiraishi, chief market economist at Daiwa Securities SMBC.
Japan's central bank raised interest rates in July for the first time in six years to 0.25 percent from virtually zero. Some fear raising rates again too soon would snuff out the recovery, which is the longest in Japanese postwar history.


Updated : 2021-02-27 03:38 GMT+08:00