TOKYO, 30 August 2003 — Hopes for an economic recovery in Japan were given a boost yesterday after fresh data showed a pickup in industrial output and the level of joblessness held firm. The government said industrial output in July rose 0.5 percent from the previous month due to strong demand for high-tech products while the nation’s jobless rate in the month was unchanged at 5.3 percent.

The rise in industrial output was well above economists’ forecasts, boosting interest in Japanese shares and lifting the yen to a high of 117.05 to the dollar. The Tokyo Stock Exchange’s key Nikkei-225 index ended the day 118.33 points or 1.16 percent higher at 10,343.55.

“Both exports and domestic demand were firm in the month,” a Trade Ministry official said, adding output of electronic devices used for mobile phones and flat-panel displays grew 0.9 percent month-on-month. Industrial shipments in July fell 1.1 percent from June while inventories rose 1.4 percent, the Trade and Industry Ministry said.

“The July output confirmed Japan’s steady economic recovery. Exports remain the leading factor of the recovery but we are seeing a rise in capital investment and a recovery in domestic demand,” said Hidehiko Fujii, senior economist at Japan Research Institute.

The government forecast August industrial output would rise 2.0 percent month-on-month and September output would increase 1.5 percent. “The July output reflected an overall recovery in the global economy. In particular, our exports to Asia grew as demand in the region picked up after SARS,” said Masashi Murata, an economist at UFJ Institute. The outbreak of Severe Acute Respiratory Syndrome plagued much of East Asia earlier this year and devastated the region’s vibrant tourism industry.

Meanwhile, Japan’s jobless rate in July was unchanged at 5.3 percent with the number of people out of work falling to 3.42 million, down 100,000 from a year earlier, the government said. About one-third of the unemployed lost their jobs due to restructuring and corporate failures, said an official from the home affairs and public management ministry.

The unemployment rate for men fell to 5.5 percent from 5.7 percent in June, while that for women rose to 4.9 percent from 4.8 percent. But the jobless rate for men aged 15 to 24 stood at 11 percent and that for men aged from 55 to 64 was 6.5 percent.

In a separate report, the Labor Ministry said the ratio of job offers to seekers in July stood at 0.62, against 0.61 in June. The July ratio means that there were 62 vacancies for every 100 job applicants.

Less encouragingly, the government also said consumer prices in July fell 0.2 percent from a year earlier, extending their decline to a 47th consecutive month, while salaried household spending in July dropped 6.0 percent from a year earlier, marking the largest year-on-year decline since March 1994.

It blamed the unusually cold and wet summer for the weak spending as well as a 3.6-percent fall in sales at large retail stores in the month. “The cool weather continued into August so we will see another bad number especially for consumption in August,” said Masaaki Kanno, chief economist at JP Morgan.

Japanese shares are expected to firm next week on continued hopes for economic recovery in Japan and the United States, brokers said yesterday.

“Japanese shares have been firming on hopes that the recovery trend in Japan and the United States is finally on a steady path,” said Masayoshi Yano, senior manager of equities information for Tokai Tokyo Securities.

“Japanese output figures were good. The United States also has been releasing a series of strong economic data. (The) NASDAQ hit 1,800 overnight (on Thursday). I think many factors are pointing upward movement of Japanese shares,” Yano said.

Japanese shares would benefit if foreign investors, returning from the summer break, maintain their optimism over the outlook, especially for the US economy, said Toshihiro Matsuno, broker at SMBC Friend Securities.