Japanese consumer confidence increases for second month in a row

Japanese consumer confidence increases for second month in a row

03-16-2010 09:07

Japanese confidence increased for a second consecutive month in February, due to joblessness reaching the lowest level in almost one year and as a result of the less deteriorated job market, while salaries started to rise. Japan’s exports are improving and stimulate the enervated economy, which provided corporate earnings and consumer confidence support to recover.

Consumer confidence

Japanese consumer confidence increased last month from 39.4 to 40.0. In the meantime, consumer confidence household rose to 39.8 in February, in comparison to the previous reading of 39.0, while analysts had forecasted a reading of 40.0.

Exports

Exports rose in the last period, which stimulated manufactures and firms to increase staff levels, boosting household sentiment for a second consecutive month in February. In the last quarter of last year, exports rose by 5%, providing support for a more stable employment situation, while improved exports also spurred the revival of Japan’s economy.

Japan’s GDP

Nevertheless, improved confidence could stimulate consumers to raise spending, as the Japanese GDP consists for more than 50% of consumer spending. It is likely that retail sales will rise in the next months, boosted by increased confidence and low consumer prices.

Industrial production

Industrial production has been rising for ten months in a row, stimulated by the improving worldwide demand, particularly from China, which is Japan’s most important trade partner. Manufacturing plants started to extend the number of working hours, and created extra jobs in response to the increasing demand, which helped household sentiment.

Household spending

The joblessness rate dropped to 4.9% in the first month of this year, reaching the lowest rate in almost one year, as firms created 540.000 jobs at the start of 2010. Household spending profited from a more favorable labor market situation, as it rose for a sixth consecutive month in January, providing retailers prospects for increased sales and earnings.

Japanese economy

However, Japan’s economy expanded by 0.9% in the third quarter, in comparison to 0.3% in the second quarter. The Japanese economy grew on a yearly basis by 3.8%, while it didn’t grow, neither contracted in the preceding three months.