Tokyo (AsiaNews/Agencies) – Japan's industrial production jumped at the fastest pace in 56 years in April, with predictions for further gains in May and June. Even though economists are optimistic, time will be needed before there can be an effective economic recovery with an unemployment rate that has risen to 5% (maximum levels since 2003) and slowing internal demand.
Companies making electric parts, chemicals and transport equipment posted particularly strong gains. According to the Ministry of Economy, manufacturers expect production to soar 8.8 % in May and 2.7% in June due to brightening prospects for a recovery in global demand. Thus Japanese exports continue their upward trend of April after relatively sluggish period.
The increase comes on the back of massive lay-offs and production cuts by companies due to recession pressures, in their efforts to reign in production costs. For example, innovation costs slid to 2.7%in April. But this directly affected many family budgets, with 3.46 million unemployed according to official data. Family consumption slid to 1.3% in April compared to the same time last year. The consumer index dropped by 0.1%, and is forecast to drop by a further 0.7% in May. Symptoms that any real recovery is still a long way off and that the increase in production is linked to the stability of world markets, after recent heavy losses.
Chiwoong Lee, an economist at Goldman Sachs in Tokyo, predicts unemployment will rise to record levels and hit 6 % by the end of next year, and that weak consumption and expanding job losses could reverse the recovery in industrial output later this year. This week global camera manufacturer Nikon announced it will cut a further 1,000 jobs.
Yasunari Ueno, chief economist at Mizuho Securities Co. in Tokyo, has also forecast that the “economy will remain sluggish with “highs and lows until the second half of 2010”.
Other analysts note that these improvements are a result of the government’s stimulus package for a total of 15,400 billion Yen (circa 113billion euro) aimed at supporting production and internal demand.