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Japan forced to amend budget over dodgy data scandal

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TOKYO: Japan said Friday it will have to amend its upcoming budget to fund compensation for people whose benefits were incorrectly paid for years because of a scandal involving incorrect labour data.

The labour ministry admitted this week that it has for years failed to collect complete data for its monthly employment report, which is closely watched as an indicator of wages and work hours.

The data helps determine various government benefits, including employment insurance.

Officials are supposed to gather data from all firms with 500 or more employees but in Tokyo, only about one third of 1,400 such firms were surveyed.

Local media said the scandal could date back more than a decade and a total of 53 billion yen ($490 millions dollars) would be repaid to 20 million workers.

“I have received a report from the labour and welfare ministry that they need to provide employment insurance and other payments retroactively,” top government spokesman Yoshihide Suga told reporters.

“We will make adjustments to make a necessary budget allocation in the fiscal 2019 budget” for the year starting in April, he said.

He gave no details on how much would need to be repaid, and added that the government was now probing dozens of other major data sets.

The labour minister has admitted he received a report about the problem as early as December 20.

The ministry nevertheless went ahead and published data on December 21 and January 9 that it knew had sampling problems, raising questions about the reliability of official statistics in the world’s third-biggest economy.

The monthly labour survey has been watched by the government and the Bank of Japan as a clue for their economic policy decisions.

Suga said it was “extremely regrettable” that confidence in the survey was shaken.

 

 

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China to pass US in retail sales this year: forecast

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NEW YORK: Chinese consumers should outspend their American counterparts in 2019, with retail sales in the Asian giant continuing to grow in the coming years, according to an industry forecast published Wednesday.

Retail sales in China are expected to hit $5.64 trillion, an increase of 7.5 percent over 2018, while Americans are likely to spend $5.53 trillion, a 3.3 percent increase, according to the market research firm eMarketer.

“In recent years, consumers in China have experienced rising incomes, catapulting millions into the new middle class,” Monica Peart, forecasting director at eMarketer, said in a statement.

Growth in China’s retail sector has been driven by online sales, which should expand by 30 percent this year, reaching $1.99 trillion, according to the firm.

This would mean more than 35 percent of all Chinese retail sales will occur online, by far the highest proportion for e-commerce in the world.

By comparison, online sales in the United States represented only 10.9 percent of the overall market in 2019, according to eMarketer.

China’s online retail sales are already greater in value than in the United States and should represent 55.8 percent of global online eCommerce by the end of this year, rising to 63 percent by 2022 — when Americans will account for only 15 percent.

While its market share has steadily declined in recent years, Chinese online retail giant Alibaba should still account for 53.3 percent of online retail in China this year, according to eMarketer.

 

 

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US stocks end higher after mostly good earnings

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NEW YORK: Strong earnings from IBM and others lifted the Dow on Wednesday and compensated for worries about US-China trade relations and a government shutdown following a volatile session.

The Dow Jones Industrial Average finished up 0.7 percent at 24,575.62.

The broad-based S&P 500 advanced 0.2 percent to 2,638.70, while the tech-rich Nasdaq Composite Index added 0.1 percent at 7,025.77.

Procter & Gamble surged 4.9 percent after lifting its full-year sales forecast following better-than-expected results, while fellow Dow member IBM jumped 8.5 percent after results topped expectations.

United Technologies, another Dow component, advanced 5.4 percent after results.

But all three stock indices slid into negative territory for a stretch in the middle of the session amid worries over trade and the shutdown.

“We need to get these things resolved before investors feel more confident about this market,” said Art Hogan, chief market strategist at National Holdings.

Economists have downgraded their growth estimates for 2019 and some financial analysts view an earnings recession — defined as two or more quarters of falling profits — as a rising possibility.

Among others reporting earnings, Comcast jumped 5.5 percent after reporting a 26.1 percent rise in quarterly revenues to $27.8 billion, with net subscriber additions exceeding expectations.

But Kimberly-Clark shed 2.7 percent after fourth-quarter profits fell 33.4 percent to $411 million, with higher commodity costs denting earnings.

 

 

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British pound rises as markets await ECB decision

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NEW YORK: The British pound rose to two-month peaks against the euro and the dollar on Wednesday as traders girded for a likely dovish message from the European Central Bank.

Britain is still far from a deal with the European Union ahead of a March 29 deadline but currency traders continue to bet against a no-deal exit, seen as the worst outcome for the country.

The British currency fetched $1.3068 near 2120 GMT from $1.2954 the prior day, also advancing against the euro.

“The pound’s resilience suggests that markets see a greater chance of Brexit getting delayed beyond March or possibly being put to a second referendum,” said Western Union Business Solutions Senior Market Analyst Joe Manimbo.

Hopes “Britain might avoid an ugly, economy-throttling exit from the EU” overshadowed weak factory data, Manimbo added.

Analysts are not expecting any bombshells at Thursday’s European Central Bank meeting but chief Mario Draghi could acknowledge growing risks to the eurozone economy while sticking to the bank’s patient course.

The central bank is caught at an intermediate stage of withdrawing crisis-era stimulus, having wound up net purchases of government and corporate bonds — so-called “quantitative easing” — but seeing the economy still too fragile to lift interest rates from their historic lows.

Draghi said last month that QE had been “the crucial driver of recovery in the eurozone” since its introduction in 2015 — while insisting growth could continue after its withdrawal and blaming one-off factors for signs of weakening momentum.

Since then, new data “have done little to stop fears of a more prolonged slowdown,” ING-DiBa economist Carsten Brzeski said.

“Confidence indicators are still plunging, hard data remains weak and latest Brexit developments suggest that new turbulence in both financial markets and the real economy is still on the horizon.”

 

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