Japan Indexes Erase August Losses, Jobless Rate Advanced to 11-month High, Retail Sales Growth Slowed

Akira Ito
30 Aug, 2024
Tokyo

Benchmark indexes in Tokyo advanced in Friday's trading, and investors reviewed the latest updates on retail sales, the jobless rate, and Tokyo-area inflation. 

The Nikkei 225 and Topix indexes gained 0.7% and closed nearly unchanged in August after falling sharply earlier in the month. 

Stocks plunged in the first week of August following the Bank of Japan's hawkish shift to an interest rate stance, leading to the yen's rally and the unwinding of the carry trade. 

Investor sentiment recovered over the next three weeks after worries of a U.S. economic slowdown eased and the central bank reassured markets that it would not raise rates further when markets are unstable. 

The yen traded at 144.93 against the U.S. dollar, nearly unchanged from the previous session, but the possibility of a rate hike by the Bank of Japan in three weeks loomed. 

Japan's unemployment rate increased to 2.7% in July from 2.5% in the previous month, the Ministry of Internal Affairs and Communications reported Friday. 

The jobless rate rose to the highest level since August 2023. 

The number of unemployed increased by 110,000 to 1.87 million, while employment fell by 200,000 to 67.66 million, and the labor force shrank by 90,000 to 69.54 million. 

At the same time, the jobs-to-applicants ratio increased to 1.24 from 1.23 in June. 

Core consumer price inflation for the Ku-area of Tokyo increased for the fourth month in a row and increased to a six-month high, the Statistics Bureau of Japan reported Friday. 

Core consumer price inflation increased to 2.4% in August from 2.2% in July and matched the level in March. 

Meanwhile, overall consumer price inflation rose to 2.6% in August from 2.2% in July. 

Retail sales in Japan advanced 2.6% from a year ago in July, slowing from a 3.8% increase in June, the Ministry of Economy, Trade & Industry reported in a separate report on Friday. 

On a monthly basis, retail sales advanced 0.2%, slower than 0.6% in the previous month. 

Retail sales advanced for the 28th month in a row as rising wages contributed to the growth in retail sales, driven by a 9.6% increase in non-store sales, a 6.3% rise in automobile sales, and pharmaceuticals & cosmetics by 5.1%. 

Industrial production in July increased 2.7%, the Ministry of Economy, Trade & Industry said in a separate report on Friday. 

The ministry also adjusted its production growth estimate and acknowledged the volatile nature of the series. 

Industrial production is expected to slow to 2.2% in August and shrink 3.3% in September. 

 

Japan Stock Movers 

The Nikkei 225 stock average increased 0.7% to 38,647.75, and the Topix index gained 0.73% to 2,712.63. 

Tech stocks, banks, and industrial conglomerates were among the leading gainers in Tokyo in Friday's trading. 

Tokyo Electron, Avantest, Screen Holdings, and Lasertec rose between 0.4% and 2%. 

Retailers also participated in Friday's market rally. 

Fast Retailing Co. increased 0.3% to ¥46,650.0, Aeon Co. declined 1.8% to ¥3,649.0, Isetan Mitsukoshi rose 0.5% to ¥2,193.0, and Seven & I decreased 0.9% to ¥2,098.50. 

Mitsubishi UFJ Financial rose 1% to ¥1,528.0, Sumitomo Mitsui Financial decreased 0.2% to ¥9,550.0, and Mizuho Financial Group added 0.4% to ¥3,009.0. 

Furukawa Electric rose 4.7% to ¥3,600.0, TDK Corp. added 3.5% to ¥9,847.0, and Taiyo Yuden gained 2.2% to ¥3,596.0. 

Terumo Corp. declined 2.8% to ¥2,689.50 and Nitori Holdings dropped 2.9% to ¥21,720.0.