 "Japanese economy grows at fastest pace in a year")
Japan's climb out of recession accelerated unexpectedly in the first quarter of the year, the government said on Wednesday, as the economy grew at its fastest pace since the beginning of 2014.
The country's statistics agency said the economy expanded at an annualised rate of 2.4 per cent in the three months through March. It was the second consecutive quarter of growth after an abrupt but short-lived downturn in the middle of last year.
The growth was also stronger than experts had expected, thanks to surprisingly robust spending by households, particularly on homes and home renovations. Economists surveyed by news agencies had projected annualised growth of 1.5 per cent, on average.
The expansion could provide a lift to the government of Prime Minister Shinzo Abe, which has struggled to convince the public of the merits of a two-year economic stimulus campaign known as Abenomics.
The programme, which involves vast injections of cash into the economy by the central bank, has fattened profits at large corporations and lifted the stock market. But so far many ordinary Japanese have said they feel few if any benefits.
Economists say Japan is experiencing a more extreme version of the lopsided recovery that is underway in the United States, where unemployment has fallen but wages for many workers are stuck.
"My wages haven't gone up," said Azusa Nemoto, 37, a contract worker in the publishing industry. She said her bosses often tell her to leave early to save on overtime costs. "The way I see it, the economy is still bad," she added.
A shrinking labour force and a rock-bottom unemployment rate of 3.4 per cent make finding a job easy in Japan - but finding one that pays well is increasingly hard. Nearly 40 percent of Japanese workers are now part time or on temporary contracts, earning about a third less than their permanent, salaried counterparts.
Companies have switched to these irregular workers in part to avoid the customary commitment to lifetime employment for permanent staff.
Abe has been putting unusually strong pressure on Japanese businesses to share profits with their workers by raising wages. Many have complied. Toyota, for instance, increased base pay for its Japanese workers by the largest margin in 13 years.
"It's time for executives to decide to shift to more expansionary management," Akira Amari, Abe's economics minister, said at a news conference after the report on Wednesday.
Still, economists caution that the benefits have accrued disproportionately to an elite but shrinking minority, those with permanent jobs at major companies.
Naohiko Baba, the chief Japan economist at Goldman Sachs, estimates that the growth of Japan's irregular work force is depressing average wages by as much as 0.5 perc ent a year. "Pay rises do not necessarily increase Japan's average wage," he said.
The economic report on Wednesday was preliminary, and Japanese gross domestic product data is often subject to large revisions. Still, it provided reasons for optimism, particularly because growth was more domestically driven than experts had expected.
Consumer spending grew at an annualised 1.5 percent pace in the first quarter, according to the report, continuing a modest but steady recovery from last year's recession. Housing investment was even stronger, growing 7.5 percent, the first expansion in a year.
The Japanese economy was stuck in recession in the middle two quarters of 2014, after the government raised the national sales tax in April and put the brakes on consumer spending.
Sounding a cautionary note, economists pointed out that the economic report showed businesses' inventories of unsold goods were also rising, meaning that not all their production was reaching consumers. That could foreshadow a reversal in economic activity.
Foreign trade, often an engine of economic expansion for Japan, turned into a drag on growth in the latest quarter. The expansion in gross domestic product in the first quarter was more domestically driven than experts had expected.
Japanese exports have been increasing, thanks to robust demand in markets like the United States. A weak yen is doubling the benefits for Japanese companies by allowing them to convert each dollar or euro they earn into more of their home currency.
But imports grew even more than exports in the first quarter, possibly reflecting a rebound in the price of oil. Exports grew at an annualised 9.9 percent pace, while imports grew by 12 percent.
Overall growth accelerated from 1.4 percent in the last three months of 2014, according to updated quarterly data in the economic report.
©2015 The New York Times News Service
The country's statistics agency said the economy expanded at an annualised rate of 2.4 per cent in the three months through March. It was the second consecutive quarter of growth after an abrupt but short-lived downturn in the middle of last year.
The growth was also stronger than experts had expected, thanks to surprisingly robust spending by households, particularly on homes and home renovations. Economists surveyed by news agencies had projected annualised growth of 1.5 per cent, on average.
The expansion could provide a lift to the government of Prime Minister Shinzo Abe, which has struggled to convince the public of the merits of a two-year economic stimulus campaign known as Abenomics.
The programme, which involves vast injections of cash into the economy by the central bank, has fattened profits at large corporations and lifted the stock market. But so far many ordinary Japanese have said they feel few if any benefits.
Economists say Japan is experiencing a more extreme version of the lopsided recovery that is underway in the United States, where unemployment has fallen but wages for many workers are stuck.
"My wages haven't gone up," said Azusa Nemoto, 37, a contract worker in the publishing industry. She said her bosses often tell her to leave early to save on overtime costs. "The way I see it, the economy is still bad," she added.
A shrinking labour force and a rock-bottom unemployment rate of 3.4 per cent make finding a job easy in Japan - but finding one that pays well is increasingly hard. Nearly 40 percent of Japanese workers are now part time or on temporary contracts, earning about a third less than their permanent, salaried counterparts.
Companies have switched to these irregular workers in part to avoid the customary commitment to lifetime employment for permanent staff.
Abe has been putting unusually strong pressure on Japanese businesses to share profits with their workers by raising wages. Many have complied. Toyota, for instance, increased base pay for its Japanese workers by the largest margin in 13 years.
"It's time for executives to decide to shift to more expansionary management," Akira Amari, Abe's economics minister, said at a news conference after the report on Wednesday.
Still, economists caution that the benefits have accrued disproportionately to an elite but shrinking minority, those with permanent jobs at major companies.
Naohiko Baba, the chief Japan economist at Goldman Sachs, estimates that the growth of Japan's irregular work force is depressing average wages by as much as 0.5 perc ent a year. "Pay rises do not necessarily increase Japan's average wage," he said.
The economic report on Wednesday was preliminary, and Japanese gross domestic product data is often subject to large revisions. Still, it provided reasons for optimism, particularly because growth was more domestically driven than experts had expected.
Consumer spending grew at an annualised 1.5 percent pace in the first quarter, according to the report, continuing a modest but steady recovery from last year's recession. Housing investment was even stronger, growing 7.5 percent, the first expansion in a year.
The Japanese economy was stuck in recession in the middle two quarters of 2014, after the government raised the national sales tax in April and put the brakes on consumer spending.
Sounding a cautionary note, economists pointed out that the economic report showed businesses' inventories of unsold goods were also rising, meaning that not all their production was reaching consumers. That could foreshadow a reversal in economic activity.
Foreign trade, often an engine of economic expansion for Japan, turned into a drag on growth in the latest quarter. The expansion in gross domestic product in the first quarter was more domestically driven than experts had expected.
Japanese exports have been increasing, thanks to robust demand in markets like the United States. A weak yen is doubling the benefits for Japanese companies by allowing them to convert each dollar or euro they earn into more of their home currency.
But imports grew even more than exports in the first quarter, possibly reflecting a rebound in the price of oil. Exports grew at an annualised 9.9 percent pace, while imports grew by 12 percent.
Overall growth accelerated from 1.4 percent in the last three months of 2014, according to updated quarterly data in the economic report.
©2015 The New York Times News Service