Japan’s Recession Is Abating, Economic Index Shows
Japan’s deepest postwar recession is easing, according to the government’s broadest measure of economic health.
The coincident index climbed to 85.8 in April, the first advance in 11 months, the Cabinet Office said today in Tokyo. Economists surveyed by Bloomberg expected the gauge, a composite of 11 indicators including factory production and retail sales, to rise to 86.
Japan’s exports have gotten a boost from public spending in China and other countries, while Prime Minister Taro Aso’s record stimulus spending on tax incentives and cash handouts helped consumer sentiment advance to a 10-month high in April. Investor optimism that the worst is over for Japan has also spurred a 38 percent gain in the Nikkei 225 Stock Average since March 10, when it was at a 26-year low.
“We expect the economy to register positive growth between the second and third quarters, given the stabilization of the export environment,” said Takahide Kiuchi, chief economist at Nomura Securities Co. in Tokyo.
The Cabinet Office said the coincident index is showing signs of bottoming, raising its assessment of the measure.
Reports since the first quarter, when the economy shrank a record 15 easy fast payday loans.2 percent, suggest the nation is recovering from its worst recession since World War II. Industrial production and exports have improved two months running and bankruptcies fell in May for the first time in a year. Finance Minister Kaoru Yosano said today higher stock prices indicate the economy may recover in six months.
Still, even as overseas demand shows signs of stabilizing, exports and factory output have fallen by more than a third since the global financial crisis deepened in September. Corporate profits tumbled a record 69 percent last quarter, putting pressure on companies to cut jobs and investment.
Economists surveyed by Bloomberg expect the unemployment rate will rise next year to an unprecedented 5.7 percent from the current 5 percent. Japanese companies plan to reduce spending on plant and equipment by 16 percent in the current business year, according to a Nikkei newspaper survey published yesterday. Automakers Toyota Motor Corp. and Honda Motor Co. will cut spending by more than a third, the survey said.