Record Budget in Japan; Jobless Rate Rises

Mayank Mehta
25 Dec, 2009
New York City

Japan passed its record net fiscal year budget of $1 trillion that will lower spending on construction projects and provide more assistance to families and increase spending on education. Unemployment rate increased in November to 5.2% and consumer prices decreased 1.7%.

[R]8:30 PM Tokyo, Japan – Japan passed its record net fiscal year budget of $1 trillion that will lower spending on construction projects and provide more assistance to families and increase spending on education. Unemployment rate increased in November to 5.2% and consumer prices decreased 1.7%.[/R]

The Japanese government passed on Friday next fiscal year budget that focus more on families and less on building projects. The ¥9.3 trillion or $1 trillion record budget has many populist measures to fulfill the election promises of Prime Minister Yukio Hatomaya.

The government is struggling to increase jobs, restrain government borrowing and support the job market. The budget does not lower the highway tolls and gasoline taxes as promised during the recent elections.

Japan will issue ¥44.3 trillion of new debt that will catapult the public debt to ¥862 trillion or 181% of gross domestic product by the end of the next fiscal year. The government debt share of the economy in Japan is the highest among all industrialized nations.

The Nikkei 225 Stock Average in Tokyo closed lower 42.21 or 0.40% to 10,494.71 as most of the world financial markets were closed.

Unemployment rate in November increased to 5.2% from 5.1% in October, according to the latest data from the statistics office in Japan. The decline in employment rate has slowed but the economic recovery is uneven and protracted.

Of the stocks in Nikkei 225 Stock Average, 44 increased, 161 declined and 20 were unchanged.

Consumer prices excluding fresh food decreased 1.7% in the previous month, the ninth monthly decline in a row and household spending increased 2.2% in the month, its fourth monthly gain in a row.

Nikkei Movers

Kajima Corporation led the decliners in the Nikkei 225 Stock Average with a loss of 3.1% followed by losses in Konami Corporation of 3.0%, in Unitika Ltd of 2.8%, in Taiheiyo Cement Corporation 2.7% and in Oki Electric Industry Company, Limited 2.5%.

Marui Group Co Ltd led gainers in the Nikkei 225 Stock Average index with a rise of 3.1% followed by gains in Isetan Mitsukoshi Holdings Ltd 2.7%, in Hokuetsu Kishu Paper Co., Ltd of 1.7% and in Meidensha Corporation of 1.6%.

Other Movers

Aeon Fantasy Co., Ltd the amusement park operator’s decreased 1.7% to ¥976.00.

Ain Pharmaciez Inc added 5.2% to ¥2,215.00 after the drugstore chain was upgraded to “strong outperform” from “outperform” at Mitsubishi UFJ Financial Group Inc.

Amada Co the machinery maker rose 3.6% to ¥590.00.

Kajima Corp slipped 3.1% to ¥183.00.

Mitsui-Soko Co increased 4.9% to ¥338.00 after the warehousing and freight-hauling company said that it will retire 15 million or 10.7% of its total shares outstanding, effective December 30. After the retirement, the total of its shares outstanding will be 124.4 million.

NEC Electronics Corporation dropped 2.8% to ¥760 after the chipmaker said that it has raised its full-year consolidated outlook for revenue from ¥460 billion to ¥462 billion, but lowered its full-year outlook for operating loss from ¥46.5 billion to ¥ 47.5 billion and net loss from ¥55 billion to ¥59 billion, as well as amended its full-year consolidated outlook for ordinary loss from an undetermined value, to ¥51.5 billion, for the fiscal year ending in March.

OncoTherapy Science Inc gained 2.7% to ¥135,800 after the pharmaceutical researcher concluded an exclusive license contract with Kyowa Hakko Kirin Co., Ltd.

Through the contract, the company''s subsidiary will provide the exclusive rights of development, manufacturing and sale of an antibody product to Kyowa Hakko Kirin Co., Ltd. and will obtain contract payment, milestone and royalty revenue.

Renown Inc surged 24.6% to ¥167.00 after the textile business said that it has formed a business alliance with Itochu Corporation. Through the business alliance, Itochu will purchase 469,190 shares of Leilian Co Ltd a subsidiary of the company at the price of ¥8,764 million in total, effective January 15, 2010.

Tokyo Tatemono Co., Ltd the office buildings and condominiums landlord increased 2.5% to ¥360.00.

Tokyu REIT Inc surged 11.3% to ¥489,000.00 after the real estate investment trust company said it has raised its forecast for operating income from ¥7,222 million to ¥25,316 million and operating profit from ¥3,249 million to ¥14,209 million.

The ordinary profit is expected to increase from ¥2,338 million to ¥13,297 million, and net profit from ¥2,337 million to ¥13,296 million, for the period from August 1, 2009 to January 31, 2010.