By Aki Ito March 15 (Bloomberg) -- Japan’s household sentiment rose for a second month in February as the economic recovery began to generate jobs. The confidence index climbed to 39.8 from 39 in January, the Cabinet Office said today in Tokyo. The median estimate of six economists surveyed by Bloomberg was for a gain to 40. A number below 50 number means pessimists outnumber optimists. Japan’s export-led revival is beginning to stabilize the labor market, helping build the base for a broader recovery that includes households. Spending by consumers accounts for more than half of the world’s second-largest economy. “Obviously, nine to 12 months ago, things were bad beyond belief. As that has reversed, you’ve seen a fairly standard response in consumer spending,” Richard Jerram, chief Asia economist at Macquarie Securities Ltd. in Tokyo, said before the survey was released. “Something would have to go significantly wrong for the unemployment rate to go back up.” All four components of the confidence index rose, with sentiment about jobs leading the gains. In a sign deflationary expectations are easing, the proportion of respondents who said prices will fall dropped for a second month and the percentage of people who said prices will rise increased. Stock-Market Rally The economy expanded at an annual 3.8 percent pace in the fourth quarter of 2009, spurred by exports and emergency government measures. The Nikkei 225 Stock Average has climbed more than 5 percent this month on speculation the recovery will be sustained. It was little changed at 2:49 p.m. in Tokyo. A pickup in factory output is prompting manufacturers to keep workers on for more hours and add employees. An increase in overtime helped paychecks rise for the first time since May 2008. Mazda Motor Corp., 11 percent owned by Ford Motor Co., will hire 150 contract workers in Japan to respond to an increase in production, Kyodo News reported this month. Japan added 540,000 jobs in January, unexpectedly sending the unemployment rate to a 10-month low of 4.9 percent. Household spending gained for a sixth month in the same period. Even so, Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo, says the improvements in employment may not be enough to offset a fading of stimulus in the months ahead. Consumer spending, which gained for three consecutive quarters in the rebound from Japan’s deepest postwar recession, may drop in the first half of this year, she said. To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net

Source