By Aki Ito
Aug. 14 (Bloomberg) -- Japan’s demand for services rose unexpectedly in June as government stimulus measures spurred consumer spending, another sign that the economy is emerging from a recession.
The tertiary index, which captures 63 percent of the economy, climbed 0.1 percent from May, when it slid a revised 0.3 percent, the Trade Ministry said today in Tokyo. The median estimate of surveyed was for a 0.3 percent drop.
Prime Minister Taro Aso’s 25 trillion yen ($262 billion) stimulus has helped counter Japan’s deepest postwar recession by providing people with cash handouts and incentives to buy energy-efficient cars and electronics. Worsening job prospects and falling wages make it unlikely consumers will lead a recovery once the government spending runs out.
“The improvement in consumer spending was largely bolstered by the government’s stimulus measures,” said Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute in Tokyo. “It’s unclear whether consumers will continue spending after the measures are withdrawn.”
A separate report today showed Bank of Japan policy makers are cautious about the outlook. Some members said last month emergency credit programs may need to be extended into 2010, according to minutes from a July 14-15 meeting published today. The central bank extended measures to buy corporate debt from lenders for three months until Dec. 31 at the gathering.
Nikkei Climbs
The Nikkei 225 Stock Average rose 0.9 percent to 10,612.92 at 10:42 a.m. in Tokyo. The gauge has climbed 49 percent since touching a 26-year low on March 10.
Business at service providers is growing. Fast Retailing Co. reported sales at its Uniqlo stores rose 6.4 percent in June. Softbank Corp., Japan’s third-largest mobile-phone company, said profit rose 41 percent last quarter amid subscriber growth.
The stimulus package and a rebound in stock prices drove consumer confidence to a 20-month high in July, the Cabinet Office said this week. An increase in stock transactions and higher demand for engineering services related to public-works projects led the gains in the tertiary index, the report showed.
A rebound in exports and production probably helped the economy expand for the first time in a year last quarter. Gross domestic product rose at a 3.9 percent annual pace in the three months ended June after contracting a record 14.2 percent in the first quarter, analysts expect a report will show Aug. 17.
Remains Sluggish
The Bank of Japan said this week that while shipments abroad and factory output are improving, domestic demand remains sluggish and the outlook for a recovery is uncertain.
Wages fell at a record pace of 7.1 percent in June, and the jobless rate reached a six-year high of 5.4 percent. Economists expect the jobless rate to climb to an unprecedented 5.9 percent by next year, according to a Bloomberg News survey.
“For a strong recovery, we need to see improvements in the jobless rate and wages,” Shinke said. “We probably won’t see that until the end of 2010.”
To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net
Posts
No comments:
Post a Comment