Japan's income up 5.6% -- 2nd largest economy improves

September 6, 2006

Japan’s household income for July grew 5.6% faster than inflation over the last year, while the unemployment rate dropped to 4.1%, according to the Ministry of Internal Affairs and Communication.

On September 1, the Bank of Japan upgraded its assessment of the economy to “expanding moderately” and revised its forecast of GDP growth from 2% to 2.5%. This upgrade is based on indications of strong business growth, reflecting the final “wringing out” of excess debt, labor and production capacity.

What It Means:
Japanese workers will have more disposable income to boost domestic consumption. This will help insulate Japan from a potential slowdown in exports to the U.S.

Action Steps:
Insulate your portfolio from a potential decline in the U.S. economy by making sure that it contains a good Japan-sector mutual fund.

Source: Japan Ministry of Internal Affairs and Communication web site, Bank of Japan web site