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TOKYO (MNI) – Japan’s average household spending posted the eight
straight year-on-year drop but the pace of decline slowed from the
previous two months as the drag from the March 11 earthquake disaster
eased, the Ministry of Internal Affairs and Communications showed
Friday.

Household spending fell a real 1.9% to Y276,159 last month from a
year earlier following -3.0% in April and a record drop of -8.5% in
March.

The fall in May was largely in line with the median forecast for a
1.8% drop in a Market News International survey of economists.

A ministry official told reporters that while consumer spending
continued falling in May, “there are some bright spots.”

Purchases of cars and TVs and spending on holiday hours remained
sluggish in May but households spent more on air conditioners and
washing machines as well as university education and home repairs.

In nominal terms, spending fell 1.6% y/y in May, following -2.5% in
April and -8.4% in March.

In May, real spending fell in five out of the 10 categories: food
(-1.5% y/y), utilities (-5.2%), clothing (-1.1%), transportation and
communication including automobiles (-11.3%) and culture and recreation
including holiday tours (-10.9%).

Areas of spending that rose in May were: home repairs and
maintenance (+8.2% y/y), furniture and household utensils (+22.5%),
medical care (+3.0%), education (+13.9%) and other expenditures (+1.1%).

Spending on utilities fell as consumers saved on electricity amid
fears of power supply shortages, the official noted.

The average real income of salaried workers’ households fell 2.2%
from a year earlier in May to Y413,506, a third straight drop following
-4.8% in April. Nominal income fell 1.9% in May after -4.3% in April.

Real disposable income in the average salaried workers’ household
fell 3.6% in May from a year before to Y310,012, also a third straight
fall, following -2.8% in April. It fell 3.3% in nominal terms in May
following -2.3% in April.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$,MT$$$$]

– Japan May Unemployment Rate 4.5% Vs Apr 4.7%
– Japan Apr Jobless Rate MNI Survey Median Forecast: 4.7%
– Japan May SA Jobs -100,000 M/M, 3rd Drop; Apr -140,000
– Japan May Unemployed -90,000 M/M, 1st Drop In 3M; Apr +20,000
– Japan May NSA Jobs +90,000 Y/Y, 2nd Rise In Row; Apr +70,000
– Japan May NSA Unemployed -380,000 Y/Y, 12th Drop; Apr -300,000

TOKYO (MNI) – Japan’s unemployment rate — national figures minus
the three prefectures hardest hit by the March 11 disaster — fell to
4.5% in May from 4.7% in April, hitting the lowest level in more than
two years thanks to fewer job cuts, data from the Ministry of Internal
Affairs and Communications showed Friday.

The seasonally adjusted unemployment rate for May came in lower
than the median forecast in an MNI survey of economists for 4.7%.

The government is compiling employment and unemployment data for
April and onward without records from the Iwate, Miyagi and Fukushima
prefectures, the hardest hit by the earthquake and tsunami that wrecked
the northeastern Pacific coast.

For the time being, the government will release only national data
minus the three prefectures from the monthly Labour Force survey.

In May, the ministry resumed its survey in limited areas of Iwate
and Miyagi but didn’t add the results to the national average as the
sample was small. As reference data, it said the unemployment rate was
6.5% in Iwate and 7.0% in Miyagi.

The national unemployment rate of 4.5% in May was the lowest level
since 4.5% marked in February 2009. The data showed that Japan’s labor
market had been improving steadily, at least until March 11.

In May, the number of payroll jobs fell a seasonally adjusted
100,000 from the previous month, or 0.2%, to 59.59 million, the third
straight m/m drop but slower than -140,000 in April and -460,000 in
March.

In another sign of a near-term improvement, the number of
unemployed fell by a seasonally adjusted 90,000 in May from the previous
month, or 3.1%, to 2.83 million, marking the first drop in three months
after rising 20,000 in April.

On an unadjusted basis, the number of employed people rose by
90,000 to 60.19 million in May compared to a year earlier, posting the
second consecutive year-on-year rise after rising 70,000 in April.

Looking at the longer-term trend, the unadjusted number of jobless
workers was down by 380,000 in May from a year earlier at 2.93 million,
marking the 12th straight year-on-year decline, after falling 300,000 in
April.

Job losses remained in information and communications, wholesale
and retail, as well as accommodations, eating and drinking services.

In May, the long depressed construction industry showed a rare job
creation while manufacturing and transportation also posted gains as
efforts to rebuild the quake-hit northern region and restore supply
chains for cars and electronics continue.

Meanwhile, job creation continued to be led by medical, health care
and welfare as well as education and learning support.

Other details of the report follow: The number of workers who
retired or whose contracts expired: May -20,000 y/y at 330,000 vs. April
-30,000 at 390,000.

The number of those who lost their jobs and were looking for work:
May -220,000 y/y at 750,000 vs. April -180,000 at 820,000.

The number of people who quit their job voluntarily to look for
other openings: May -10,000 at 970,000 vs. April -10,000 at 970,000.

Separately, the Ministry of Health, Labor and Welfare said that the
ratio of job offers to job seekers at government placement offices stood
at a seasonally adjusted 0.61 in May, unchanged from April (meaning
there were only 61 job offers for every 100 people looking for work).

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$,MT$$$$]

– Japan May Core CPI +0.6% Y/Y, 2nd Rise In Row; Apr +0.6%
– Japan Apr Core CPI MNI Survey Median Forecast: +0.5% Y/Y
– Central Tokyo May Core CPI +0.1% Y/Y, 3rd Rise; May +0.1%
– Japan May CPI Energy Costs +5.7% Y/Y Vs Apr +7.3%
– Japan May CPI Pushed Up By Heating Oil, Gasoline, Tobacco

TOKYO (MNI) – Japan’s national core consumer prices posted the
second straight year-on-year rise in May, as higher energy and tobacco
costs continued to offset falling electronics prices, data released
Friday by the Ministry of Internal Affairs and Communications showed.

The nationwide core CPI, which excludes fresh food but includes
energy, rose 0.6% in May from a year earlier, at the same rate in April,
when it posted the first y/y rise in over two years since December 2008.

The 0.6% increase remains the largest year-on-year rise since
November 2008, when the core CPI gained 1.0%.

May core CPI came in slightly higher than the median forecast of
+0.5% by economists polled by Market News International.

The pace of increase in gasoline and heating oil slowed in May from
April but their prices were still much higher than year-earlier levels.
The year-on-year rise in electricity charges gained in May.

State-controlled cigarette prices have continued to post a 38.6%
rise over a year before since the tobacco tax hike in October 2010.

Total national CPI rose 0.3% y/y in May after rising at the same
rate in April, which was the first rise in five months.

Overall energy costs in May rose 5.7% y/y, pushing up the total
CPI by 0.46 percentage point, after rising 7.3% in April, when made a
positive 0.58 percentage point.

Meanwhile, central Tokyo core CPI rose 0.1% year-on-year in June
following +0.1% in May and +0.2% in April, which was the first y/y
rise in over two years since +0.4% in March 2009.

Tokyo-area energy costs rose 3.5% in June (+0.19 percentage point
contribution to total CPI in the capital) after rising 3.4% in May
(+0.18 point).

National CPI excluding food and energy, or the U.S. style core CPI,
rose 0.1% in May from the year before, posting the first y/y rise in 29
months following -0.1% in April and -0.7% in March.

The central Tokyo CPI excluding both food and energy rose 0.1% from
a year earlier in June after rising 0.1% in May, which was the first
positive reading since December 2008.

In April, the CPI was pushed up by an end to the depressing effect
on the y/y change in consumer prices that came from lower high school
tuition costs.

As part of measures to support consumer spending, the government
began providing subsidies for both public and private high school
education in April 2010. The dampening effect on CPI lasted for 12
months through March this year, slashing core CPI by 0.49 percentage
point y/y every month until March.

CPI figures date to 1970 under the current 2005 base year.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$,MT$$$$]

Despite numerous Asian data releases already this morning FX is going nowhere. Perhaps it is the Friday effect with players tired after a heavy week of price moves. The chatter around dealing desks this morning centres on this weeks startling jump in US Treasury yields, massive moves overnight in soft commodities and talk of a number of  big option maturities in NY tonight. As far as I am concerned – roll on weekend!

TOKYO (MNI) – The closely watched Bank of Japan corporate sentiment
survey showed that business confidence among large manufacturers
worsened in June for the first worsening in two quarters.

The Tankan survey headline index — showing current business
sentiment among large manufacturers — dropped sharply to -9 in June
from +6 in March.

The June figure was worse than the MNI survey’s median of -7, with
economists’ forecasts ranging from -2 to -12.

The worsening reflected the impact of the March 11 earthquake and
tsunami, as the March Tankan didn’t fully include the effects of the
March 11 disaster.

In the March survey of 11,101 firms surveyed by the BOJ from Feb.
24 to March 31, only 23.6% of the responses were received after the
March 11 disaster.

Despite the sharp drop in June, survey respondents expect the index
to improve to +2 in September, as the economy recovers from the
temporary downturn caused by the March 11 earthquake and tsunami.

The diffusion index is calculated by subtracting the percentage of
companies reporting deteriorating business conditions from the
percentage of those reporting an improvement. A negative figure
indicates the majority of firms see worse business conditions.

Firms have been making major efforts to restore disrupted supply
chains and Japanese industrial production recovered from the record
month-on-month drop 15.5% in March.

Production at the nation’s factories and mines rose a seasonally
adjusted 5.7% in May from the previous month, following a revised rise
of 1.6% in April.

The May rise was the second largest gain on record after a 7.9%
increase marked in March 1953.

Moreover, production is expected to rise 5.3% m/m in June —
revised down from the 7.7% rise previously estimated — and will
increase further by 0.5% in July (first estimate), according to the
government’s latest survey of firms’ forecasts.

But heightened concern over the outlook for business conditions on
the back of the ongoing nuclear crisis and concern over a electricity
supply shortage this summer are causing firms to put some capital
investments on hold.

The assumed dollar-yen exchange rate expected by major
manufacturers this fiscal year is Y82.59, according to the June Tankan,
compared with an average Y84.20 at the previous survey.

In the June survey, sentiment among exporters – including
automakers, electronics firms and business machinery makers – worsened
from three months ago.

Large carmakers, whose sentiment worsened to -52 in June from +23
in March, saw their index surge 58 points to +6 in September.

Sentiment among large electric machinery makers fell to -16 in the
latest survey from +1 in March but they predicted it would improve to +2
in three months’ time.

The Tankan also continued to show a gap in sentiment between
export-oriented manufacturers and other sectors dependent on domestic
demand.

Business confidence among large non-manufacturers worsened for the
first time in two quarters, falling to -5 from +3 three months earlier.

But the index is expected to improve to -2 in September.

The June figure for large non-manufacturers was slightly better
than most analysts had expected. The MNI median of forecasts by
economists was -4, with estimates ranging from +2 to -10.

The sentiment index for small manufacturers worsened to -21 from
-10 in March, down for the first time in eight quarters. The index is
expected to improve to -15 in September.

The worsening in sentiment among smaller manufacturers was led by
motor vehicles, iron and steel, lumber and wood products, processed
metals, nonferrous metals as well as electrical machinery.

The index for smaller non-manufacturers fell to -26 from -19 in
March, down for the first in two quarters. Moreover, the index is
expected to worsen to -29 in September amid ongoing uncertainty over
domestic demand amid severe labor and income conditions and the ongoing
nuclear crisis.

In the latest survey, 10,799 firms, or 98.2% of the total,
responded, compared with 10,616 firms, or 95.6%, in the March survey.

In manufacturing, 4,328 firms, or 98.5%, responded vs. 4,243 firms,
or 95.9%, and in non-manufacturing, 6,471 firms, or 98.0%, responded,
compared with 6,373 firms, or 95.5%.

On capital spending plans, 10,374 firms, or 94.3%, responded, vs.
11,052 firms, or 96.9%, at the previous survey.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

[TOPICS: M$J$$$,M$A$$$,MMJBJ$,MAJDS$,MT$$$$]

JAPAN DATA: June Tankan survey from the Bank of Japan (3):
– BOJ June Tankan: FY 2010 All Firm Capex -1.9% Vs Mar +0.1%
– BOJ June Tankan: All Firms See FY 2011 Capex 0.0% Vs Mar -3.7%
– BOJ June Tankan: Big Firms’ FY 2010 Capex -1.9% Vs Mar +1.6%
– BOJ June Tankan: Big Firms See FY 2011 Capex +4.2% Vs Mar -0.4%
– BOJ June Tankan: Big Firms’ FY10 Current Profit +46.0% Vs Mar +35.8%
– BOJ June Tankan: Big Firms See FY11 Current Profit -3.4% Vs Mar +0.1%
– BOJ June Tankan: Small Firms’ FY10 Capex +2.0% Vs Mar -2.3%
– BOJ June Tankan: Small Firms See FY11 Capex -24.9% VS Mar -24.5%
– Large Makers’ FY10 Dollar-Yen Rate Y86.03 Vs Mar Y86.01
– Large Makers See FY11 Dollar-Yen Rate at Y82.59 Vs Mar Y84.20

JAPAN DATA: June Tankan survey from the Bank of Japan (2):
– BOJ June Tankan Large Non-Manufacturer Index -5 Vs Mar +3
– BOJ Sep Tankan Large Non-Manufacturer Index Seen at -2
– BOJ June Tankan Small Manufacturer Index -21 Vs Mar -10
– BOJ Sep Tankan Small Manufacturer Index Seen at -15
– BOJ June Tankan Small Non-Manufacturer Index -26 Vs Mar -19
– BOJ Sep Tankan Small Non-Manufacturer Index Seen at -29

JAPAN DATA: June Tankan survey from the Bank of Japan (1):
– BOJ June Tankan Large Manufacturer Index -9 Vs Mar +6
– BOJ June Tankan Large Manufacture Index MNI Poll Median Forecast -7
– BOJ Sep Tankan Large Manufacturer Index Forecast At +2

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