Tokyo, March 28 (Bloomberg) -- Japan's unemployment rate unexpectedly fell to 5.2 percent in February as nursing service providers added workers to care for an aging population and older people stopped looking for work. Unemployment had been expected to hold at January's record- high 5.5 percent, according to the median forecast of 38 economists surveyed by Bloomberg News. The world's second-largest economy added 100,000 jobs, while 80,000 people left the workforce, the government's statistics bureau said. Japan's swelling ranks of retirees are prompting health-care companies such as Nichii Gakkan Co. to hire more nurses to care for the elderly. While transport and building companies also added jobs last month, economists said employers may start cutting staff again as the war in Iraq hurts exports.
``Health service providers seem to be hiring more workers, but it's not as if this industry can absorb or stop the trend of more corporate layoffs that are expected to come,'' said Seiji Adachi, an economist at Credit Suisse First Boston Japan Ltd. The jobs report caps a week of better-than-expected indicators in Japan. The trade surplus in February widened as exports rose for the first month in three, and retail sales gained in the month. Companies surveyed by the Finance Ministry last month said profit rose 14.2 percent in the fourth quarter of 2002. Yet economists aren't calling an end to the slowdown in the economy. They say a war in Iraq will sap demand for exports, which accounted for half of Japan's 0.5 percent economic growth last quarter. ``The trend toward further restructuring hasn't ended altogether,'' said Ryota Sakagami, an economist at Nomura Research Institute and one of three who forecast a drop in unemployment.
Household Spending
The Iraq war and falling wages may also dent consumer spending, which makes up more than half of Japan's economy. Spending by salaried workers fell a seasonally adjusted 1.1 percent in February from January, a separate government report today showed. It fell 1.6 percent from a year ago. ``Spending has been worsening,'' said Eishi Yokoyama, an economist at AIG Global Investment Corp., who expects unemployment to rise to 6 percent in the year ending March 2004. ``The outlook is also grim as incomes have been falling.'' The Nikkei 225 Stock Average fell 1.1 percent to 8280.16 at the 3 p.m. close of trading in Tokyo. Hitachi Ltd., Japan's largest non-government employer with more than 300,000 workers, said this month that it would cut bonuses and wages in the year starting April 1. Hitachi, Japan's biggest electronics maker, shed about 20,000 jobs last business year.
Wage Cuts
``Manufacturers have slowed their job reductions and have moved their focus on cutting costs through wage cuts,'' said Masato Chino, a government official who briefed reporters on the unemployment report. Manufacturers had 140,000 fewer employees in February compared with a year earlier, the report showed. Last year, the level of employment among manufacturers was on average 620,000 lower than a year earlier. NEC Corp., Japan's largest personal-computer maker, is increasing workers in software and services while cutting employees who build hardware such as communication equipment and personal computers. The jobs-to-applicants ratio rose for the sixth straight month in February, a Health ministry report showed. There were 61 jobs for every 100 applicants, better than the 60 jobs available in January.
Aging Population
Japan's aging population of 127 million is providing new opportunities for Nichii Gakkan, the nation's biggest nursing- services company for the elderly, and Comsn Inc., the home nursing unit of Goodwill Group Inc. Nichii Gakkan expected to add 4,000 workers by March 31. The group plans to add between 2,000 and 3,000 workers each year for the next few years, the company said. Comsn plans to increase its workforce by 45 percent to 3,700 by June, Goodwill Chairman Masahiro Origuchi said in an interview last month. A separate government report showed that core consumer prices in the nation's capital, which exclude fresh food, rose a seasonally adjusted 0.1 percent in March from February. That was the first gain since July. From a year earlier, core prices fell 0.7 percent. //www.quote.bloomberg.com