The Sun is Finally Rising

By Monday, August 1, 2005

It looks like things are finally looking up for people in Japan. After a decade-long recession, the world’s second-biggest economy is now seeing signs of a recovery.

Many of the key economic indicators are looking more positive today than they have in years. Last week, Japan’s Ministry of Economy, Trade, and Industry released the following encouraging news:

—Production is up by a seasonally adjusted 1.5%

—Unemployment has dropped to a seven-year low of 4.2% (that’s lower than the unemployment rate of most European countries)

—Manufacturers of electronics and auto parts are announcing that they are expanding to meet the demand of higher sales in the U.S. and throughout Asia

—GDP is growing at a 4.9% rate (as seen in the first quarter of 2005)

—Exports rose 3.6% year over year in June

—Job creation is up throughout the country

—Discretionary bonuses to employees have also risen

—Wages have seen increases in five of the last seven months

—Consumer spending is up slightly

Would I bet that the Japanese economy is now in full turnaround mode? Nope, not yet. One positive quarter doesn’t mean a trend in my books. That said, a little hope never hurt, and I’m sure that a lot of people in Japan are breathing a sigh of relief and loosening their belts just a little bit.

I’ll be watching this economy closely over the short term; you can be sure of that. In the meantime, if your investment portfolio could use a little boost in its international holdings, now might be the time to get in early on electronics and auto parts makers in this land of a newly rising sun.

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