Japan’s labor market continued to disappoint in July as the Jobless Rate rose to a greater-than-expected 5.7%, a 33-year record high, while the ratio of available jobs to seeking applicants unexpectedly dropped to a fresh all-time low of 0.42. Looking ahead, a survey of economists conducted by Bloomberg suggests the pace of job losses will continue to accelerate at least through the second half of next year. This points to continued weakness in consumer spending as layoffs weigh on disposable incomes. Indeed, Household Spending fell -2.0% in the year to July, four times worse than forecast.
The economic outlook for the world’s second-largest economy was made all the more ominous as the Consumer Price Index fell -2.2% in the year to July, marking the sixth consecutive month in negative territory and threatening to send Japan spiraling back into another “lost decade” of deflation-fueled stagnation as consumers and businesses expecting lower prices in the future delay spending and investment, encouraged to perpetually wait for the best possible bargain.
Al Bawaba
