Japan's jobless rate fell to a three- year low of 4.7 percent in March as an economic recovery prompts companies including Toyota Motor Corp. to hire more workers. Job gains may be slow to spark consumption as a separate report showed that household spending fell for the first month in three. The economy added a seasonally adjusted 190,000 jobs last month from February, the government's statistics bureau said in Tokyo. The median forecast of 39 economists in a Bloomberg News survey was for the jobless rate to hold at 5 percent. The jobless rate was the lowest since March 2001.
The economy grew at an annual 6.4 percent pace in the fourth quarter, the fastest in more than 13 years, as companies including Sharp Corp., which are reporting record earnings, build new factories to meet rising export orders. The gains in new jobs may help support flagging personal consumption, economists say. ``Employment has entered the recovery phase,'' Tatsushi Shikano, an economist at UFJ Research Institute, said in a televised interview. With the economy recovering ``people returned to the job market and began to get jobs.'' A separate government report today showed that spending by households headed by a salaried worker fell a seasonally adjusted 6.7 percent in March. The decline may have been exaggerated by the extra leap year day in February landing on a Sunday, say economists including Osamu Tanaka at Morgan Stanley Japan Ltd.
Hiring
The yen traded at 110.21 to the dollar as of 12:54 p.m. in Tokyo, from 109.89 late yesterday in New York. Companies are looking to increase hiring. There were 77 jobs available for every 100 applicants, the labor ministry's jobs-to- applicants ratio report showed today, holding at a 10 1/2-year high. Sharp, Japan's biggest maker of liquid crystal displays, this week said net income for the year ended March 31 rose 86 percent to a record 60.7 billion yen ($552 million) because of rising demand for slimmer flat-panel televisions. It expects another record profit of 75 billion yen this business year. Toyota, Japan's biggest automaker, said it will hire 500 to 1,000 temporary production workers in Japan this month after a recent employment law change allows people hired through employment agencies to be sent straight to factories. Job placement ``demand has been increasing across industries,'' along with the economic recovery, Yoshiko Shinohara, president of Tempstaff Co., Japan's second-largest job placement agency, said in an interview this week.
Labor Force
The 0.3 percentage point drop in the jobless rate was the biggest monthly decline since April 1967, and was aided by the labor force shrinking by 40,000 people. The labor force has declined six straight years, today's report showed, because of Japan's aging population. The jobless rate fell to 5.1 percent in the year ended March 31, the first annual decline in 13 years. The Nikkei 225 Stock Average has risen 54 percent in the past year, led by exporters. Since February, retailers such as Aeon Co. and Ito-Yokado Co. have spurred stock gains as the economic recovery spreads. The Nikkei fell 2.7 percent to 11,680.13 as of the 12:54 p.m. in Tokyo, led by exporters including Kyocera Corp. on concern the U.S. and China may soon raise interest rates to curb inflation. Aeon, Japan's second-largest retailer, this month said it expects profit to rise about 20 percent in the business year started March 1, after a 7.9 percent gain in profit last year.
`Negative Payback'
``The decline in the consumption numbers should be interpreted as a negative payback for extremely strong February numbers,'' Masaaki Kanno, chief economist at J.P. Morgan Securities Asia Ltd., said in a televised interview. ``The strength of corporate sentiment, corporate profit and summer bonuses is likely to be good enough to support'' consumption. Still, nine months of falling wages and corporate cost cuts may limit gains in consumer spending, economists such as BNP Paribas Japan Ltd.'s Azusa Kato say. Companies including retailers Ito-Yokado and Seiyu Ltd. are curbing costs by hiring more part- time staff. ``We're hoping for a recovery in consumer spending but conditions are still hard,'' Noritoshi Murata, Ito-Yokado's chief financial officer, said at a press conference in Tokyo this month, when the company said profit rose 15 percent in the year ended Feb. 29. ``We've limited hiring of full-time employees this year and shifted to hiring more part-timers to staff our new outlets.'' Japanese salaries fell 2.7 percent in March, the biggest drop since December 2002, a Ministry of Health, Labor and Welfare report showed today.
Deflation
Falling prices are also hurting retail sales. In another report today, the statistics bureau said nationwide core consumer prices, which exclude those for fresh food, fell 0.2 percent in the fiscal year ended March 31, the smallest annual decline in four years. It was also the straight annual drop. The slide may extend for a seventh year, the Bank of Japan's nine policy board member said this week in a twice-yearly economic outlook, signaling the central bank remains committed to its three- year policy of zero interest rates to end deflation. ``We're yet to be convinced that there's a broadening out to private sector demand,'' said Brian Coulton, head of Asia sovereign ratings at Fitch Ratings in Hong Kong. ``There are still some question marks about how long the recovery is going to last.'' ///www.bloomberg.com