Tokyo, Jan. 30 (Bloomberg) -- Japanese consumers grew more pessimistic in the fourth quarter as jobs disappeared and wages fell amid the nation's benchmark stock index declined to its lowest reading in almost 19 and 1/2 years, a survey showed. The Cabinet office's confidence index fell to 38.1 in December from 39.6 in September. A reading below 50 shows that pessimists outnumbered optimists. Consumers were less confident on all five topics in the index for the first time since the second quarter of 1998. Japan's unemployment matched a record 5.5 percent last October, driven higher by bankruptcies of companies such as Kotobuki Industry Co. and cuts to jobs and wages. The Nikkei 225 stock average has dropped 8.6 percent in the three months ending December, to its lowest reading since March 1983. That has hurt consumer spending, which makes up more than half of the world's second-largest economy.
``Consumer confidence is weak amid falling household incomes, and people are worried about the economic outlook,'' said Minako Iida, an economist at Deutsche Securities Ltd. The No. 245 bond, which carries a 0.9 percent coupon and matures in 2012, rose 0.232 to 101.378 as of 3:20 p.m. in Tokyo. Its yield fell 2.5 basis points to 0.75 percent, a record for a 10- year bond.
`Not Good'
``The economy is not going to be good,'' said Toshifumi Sugimoto, who helps oversee 400 billion yen ($3.38 billion) at Meiji Dresdner Asset Management Co. Building material supplier Kotobuki owed 18.6 billion yen ($157 million) when it filed for bankruptcy in October after Mizuho Corporate Bank Ltd. and other lenders cut off credit. Prime Minister Junichiro Koizumi's drive to force banks to write off bad loans helped push 19,087 companies into bankruptcy last year. Confidence may fall further after companies such as JFE Holdings Inc. and Taihei Kogyo Co. cut jobs to reduce costs in the wake of slumping sales. ``Given that conditions surrounding employment and income have been quite severe, consumer sentiment is weakening,'' said Yoshihiko Senoo, head of research at the institute that released the report.
Falling Wages
JFE Holdings, the nation's second-largest steel maker, said this week it would cut 4,200 jobs, or 14 percent of its workforce, by the end of March 2006. The company lowered its profit forecast for this business year by half. Construction company Taihei Kogyo Tuesday said it will cut 400 jobs amid doubling its loss forecasts for the year ending March 31. Wage and job cuts are driving down incomes and spending. Japan's household spending fell for a fourth month in five in November, and wages have fallen for 19 months. That may sap a recovery from Japan's third recession in a decade. Japan's economy probably shrank 0.3 percent in the fourth quarter, according to the median of 12 economists' forecasts in a Bloomberg News survey, after expanding 0.8 percent in the third quarter. Koizumi's plan to force banks to write off 52.4 trillion yen of bad loans is likely to drive more companies into insolvency, economists said, swelling the ranks of the unemployed and hurting confidence. ``It's hard to see any recovery in Japan's labor market soon,'' said Iida of Deutsche Bank. Japanese consumer prices haven't risen since April 1998. While falling prices may be a boon to consumers, they are hurting corporate profits and making it harder for companies to repay debt. That in turn is forcing some companies to cut jobs. The sub-index that measures expectations for inflation fell to 46.5 from 47.5 in September. The sub-index for income growth fell to 36.4 from 37.6, while the employment sub-index fell to 26.5 from 29//www.quote.bloomberg.com