Tokyo, March 27 (Bloomberg) -- Japanese consumers probably cut spending in February amid record joblessness, government reports tomorrow will probably show, suggesting economic growth in the world's second-largest economy is slowing. Spending by households headed by salaried workers probably fell 1.1 percent in February, the fourth drop in five months, according to the median of 16 forecasts in a Bloomberg News survey. The jobless rate was probably unchanged at 5.5 percent, according to the median of 36 economists surveyed by Bloomberg. Japan Airlines System Corp. and other companies are planning more job cuts, which may further crimp consumer spending that accounts for 55 percent of the economy. War in Iraq and the Nikkei 225 Stock Average's fall to 20-year lows may also discourage shoppers, analysts said.
``Companies will continue to slash jobs this year'' as demand sags with the uncertainty surrounding global stock markets because of Iraq and other factors, said Yoshimasa Maruyama, an economist at Mizuho Research Institute. ``The economy will weaken further in the second half.'' Maruyama said the jobless rate may rise to as much as 6 percent before the fiscal year ends in March 2004. Another report tomorrow will probably show that consumer prices were little changed, lowering expectations that Japan's 4 1/2-year bout with deflation is ending. Tokyo's core consumer prices, which exclude fresh food, were probably unchanged in March from February, and likely fell 0.7 percent from a year earlier. The government's statistics bureau will release the unemployment, spending and consumer prices report at 8:30 a.m., Tokyo time, on Friday.
Earnings Decline
Sales at Japanese retailers gained for the second month in February, a government report today showed, as rising oil prices forced consumers to pay more for gasoline. Sales at supermarkets, department stores, restaurants and other retailers rose a seasonally adjusted 1.9 percent from January, according to the Ministry of Economy, Trade and Industry From a year ago, sales fell 0.2 percent. Falling spending and prices are eroding earnings at companies such as Tokyu Construction Co. which yesterday said it will cut 300 jobs over three years to improve its finances. The general contractor also reversed profit forecast of 1.3 billion yen ($10.8 million) for the year ending this month to a 300 million yen loss, to reflect a 3.8 billion yen charge for a decline in the value of real estate it holds for sale.
Stocks Decline
The Nikkei's 25 percent drop in the past year is also hurting companies that have to write down the value of shareholdings by March 31 when most firms' business year ends. The Nikkei fell 0.1 percent to 8346.53 as of 11:27 a.m. in Tokyo. Asahi Glass Co., Japan's biggest glassmaker, this week said it expects a second straight year of losses after taking a 40 billion yen charge to write down the value of shares its owns. Asahi Glass now forecasts a group net loss of 6 billion yen for its business year ending this month, reversing its earlier estimate for a 28 billion yen profit. The Bank of Japan this week said it will increase the amount of shares it buys from banks to 3 trillion yen from 2 trillion yen, to help prop up stock prices before the business year ends. That may not be enough to boost investors' confidence. ``A financial crisis may have been avoided this March as long as the Nikkei stays above 8,000 yen,'' said Akio Yoshino, who helps manages the equivalent of $19 million in assets at SG Yamaichi Asset Management Co. Still, ``more policies may be necessary by September, when banks report half-year earnings.'' The BOJ last year announced a plan to buy 2 trillion yen of shares from lenders by September to limit their investment losses, and has bought about half that amount so far. //www.quote.bloomberg.com