Japan jobless rate rises, factory output anemic

[May 31, 2011]  TOKYO (AP) -- Japan's unemployment rate rose for the first time in six months in April and industrial production remained anemic after a record drop in the aftermath of March's earthquake and tsunami.

The twin disasters have already sent Japan's economy back into recession and Moody's Investors Service warned Tuesday it could downgrade Japan's sovereign credit rating due to the faltering economy and massive public debt.

The jobless rate edged up to 4.7 percent from 4.6 percent in March due to job losses in the retail and wholesale sectors, the Ministry of Internal Affairs and Communications said. The number of workers in those sectors dropped in April by 390,000 from a year earlier.

"A lot of part-time workers in the wholesale and retail sectors lost their jobs due to weak demand following the March tsunami," said Hiroshi Watanabe, economist at the Daiwa Institute of Research.

The number of workers in the hotel and restaurant businesses in April fell by 30,000 from a year earlier, underscoring a plunge in tourism following the March disasters and an ongoing crisis at a tsunami-crippled nuclear power plant.

Japan's industrial production -- a key barometer of economic health -- inched up 1 percent in April from the previous month after plunging a record 15.5 percent in March amid supply disruptions in the wake of the disasters.

The earthquake and tsunami killed more than 24,000 people and destroyed hundreds of factories in Japan's coastal northeast, forcing manufacturers such as Toyota Motor Corp. and Sony Corp. to suspend production.

Auto production alone plunged 60.1 percent in April from a year earlier because of manufacturing disruptions caused by parts shortages.

While overall April factory output fell short of a projected rise of 2.2 percent, the government said industrial production will pick up quickly in coming months, with a rise of 8 percent expected in May and another 7.7 percent in June.

"A slump in production after the March disasters hit the bottom in March and April, and a recovery in factory output, especially in the auto sector, is under way," said senior economist Hideki Matsumura at the Japan Research Institute.

The ministry said output in the transport machinery sector, which includes auto production, will surge 35.7 percent in May and 36.7 percent in June. Automakers have said domestic production is recovering fast as shortages of parts ease.

"Output at Japanese factories looked hopeless after the March earthquake. But supply conditions improved, and each company is making utmost efforts to recover from the disaster. A fast recovery underlined the strength of Japanese manufactures," said Watanabe, the Daiwa economist.

The Japan Automobile Manufacturers Association reported Tuesday that vehicle production in April totaled 292,001 vehicles, marking a dramatic drop from 731,829 vehicles a year earlier. It was the seventh straight month of year-on-year declines.

Japanese automakers have been forced to lower production in Japan, and aren't expecting to return to pre-disaster levels until later this year.

The ratio of job offers to job seekers in April fell to 0.61, meaning there were 61 jobs available for every 100 job seekers.

The government also said average spending by Japanese households in April declined 3 percent from a year earlier to 292,559 yen ($3,620).

[Associated Press; By SHINO YUASA]

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