Japan’s [B]Jobless Rate[/B] unexpectedly fell to 5.5% in August from 5.7% recorded in the previous month. Economists were forecasting an increase to 5.8% ahead of the release. The ratio of available jobs to seeking applicants held at a record low of 0.42, the first time it did not deteriorate since January 2008. Still, the labor market faces considerable headwinds in the months ahead. The Bank of Japan’s Tankan Survey of business confidence revealed that large companies were planning to cut capital investment at the fastest pace in nearly a decade in the third quarter, pointing to firms’ expectations of lackluster demand and the likelihood of sluggish hiring. [B]Household Spending[/B] surged 2.6% in the year to August, the most in 19 months, on the back of incentive programs to buy electronic products included in the government’s hefty 25 trillion yen stimulus package. The sustainability of such performance is questionable as well; indeed, the Bank of Japan has said that domestic consumption will remain weak notwithstanding isolated policy-induced spikes in purchases of specific items.
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