Today’s reports add to evidence this week showing the recovery may be sustained: business sentiment rose for a second quarter and industrial production gained for a sixth month. Economists say the revival is likely to be tepid as companies burdened with excess capacity cut spending and deepening deflation erodes profit.
The number of employed rose by 290,000 from July, the first increase since January, the bureau said. A separate report showed the job-to-applicant ratio, a leading indicator of employment trends, stopped worsening for the first time since January 2008. The ratio stayed at a record low of 0.42, meaning there are only 42 positions for every 100 candidates.
The Bank of Japan’s quarterly Tankan business survey yesterday showed confidence among large manufacturers rose for a second straight quarter from a record low of minus 58 in March. The index gained to minus 33 from minus 48, still a level on a par with the previous recession in 2001.
That survey also showed big companies plan to cut spending at a faster pace than they anticipated three months ago and forecast profits will drop 22 percent in the year ending March. While labor demand improved from the previous Tankan, large manufacturers still reported having too many employees.
Some economists say the unemployment rate probably hasn’t peaked, as companies including Japan Airlines Corp. cut jobs even as the economy recovers. Fifteen months of wage declines are also likely to discourage consumers from spending.