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Japan's jobless rate falls
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June 30, 2000: 7:29 a.m. ET
Incomes jump for first time in 11 months; BOJ may rethink rate policy
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LONDON (CNNfn) - Japan's unemployment rate declined while workers' incomes rose in May, the government reported Friday, the latest sign that Asia's largest economy is regaining strength after a long slump. The reports may have bolstered the chance that the Bank of Japan will rethink its zero-interest rate policy.
The unemployment rate fell to 4.6 percent in May from 4.8 percent the previous month. Joblessness is still unusually high by comparison with earlier years, when the unemployment rate has been below 3 percent. Joblessness reached a record high of 4.9 percent in February and March.
The government also reported that incomes rose an adjusted 0.7 percent in May from a year earlier, the first increase in 11 months.
The Bank of Japan is watching workers' incomes to judge when to end the zero-interest rate policy that has been in place for more than 16 months. The Japanese government, hoping those low rates will stimulate consumption, has hinted strongly that the central bank should not raise rates too quickly.
Markets continued to speculate that the central bank might lift rates as early as its July 17 meeting, although Prime Minister Yoshiro Mori stressed that "aggressive fiscal and monetary policies" were still needed, Jiji news reported.
"If we were to switch to a tightening policy at this stage in a rush to cut the fiscal deficit, it would bring about an economic downturn and invite a drop in corporate earnings and profits and lead to a worsening of the fiscal condition," the prime minister was quoted as saying.
Other data reported Friday was less rosy. Personal spending, the biggest component of gross domestic product, fell 1.2 percent in May from the same month a year before, after a rise in April that had caused some optimism among analysts.
"The 1.2 percent decrease in household spending in May shows the real trend, while the rise in April was due to a special factor of extra real estate tax payments," Susumi Yamamura, a Sanwa Research Institute economist, told Reuters. "Spending has been shading lower because household incomes haven't grown enough. Summer bonuses will be almost the same as last summer."
"I think private consumption during the summer will not be good," Yamamura added.
The government reported Friday that housing starts in May fell 1.1 percent from a year earlier, after a slight rise in April. 
-- from staff and wire reports
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