UK unemployment total hits 17-year high

AFP, London: The number of unemployed in Britain reached a 17-year high of 2.53 million in the three months to January, official data showed Wednesday.

'The total number of unemployed people increased by 27,000 over the quarter to reach 2.53 million, the highest figure since 1994,' the Office for National Statistics said. That lifted the unemployment rate to 8.0 per cent.

The ONS said the number of unemployed aged 16-24 jumped 30,000 in the three months to January to 974,000, which was the worst figure since records began in 1992.

The claimant count of people registered for unemployment benefits fell unexpectedly by 10,200 in January to 1.45 million, according to the ONS.

That was the biggest drop since June 2010 and took the total number to the lowest level since February 2009.

Market expectations had been for an increase of 1,500 in the claimant count, according to analysts polled by Dow Jones Newswires.

Business as usual at Asia’s sushi restaurants

AFP, Singapore: Asian diners are still tucking into sushi at restaurants around the region despite fears that elevated radiation levels in Japan could reach the food chain and contaminate raw ingredients.

In Taiwan's Sushi Express chain, notices informed customers that all seafood was imported before Friday's quake crippled two nuclear plants on Japan's east coast sparking fires and explosions that resulted in radioactivity leaking.

'The current supply and safety of Japanese food is normal,' reads a poster on the front door of its 196 restaurants.

A spokesman for the chain said business had not been affected.

But in Hong Kong, used to health scares of its own, including the 2003 SARS outbreak, William Mark, president of the Federation of Hong Kong Restaurant Owners, said he was concerned that business would suffer.

'We're very worried,' Mark told the AFP.

'The concerns about radioactivity have a long-reaching psychological impact. There is nothing we can do. We're hoping for the best, but we don't see any silver lining in the near future.'

Elsewhere, restaurants in Singapore, India and Vietnam serving Japanese cuisine said Wednesday their businesses seemed to be unaffected by the deepening nuclear crisis, at least for now.

Singapore's largest sushi chain Sakae Holdings said customers were still flocking to its outlets, which serve sushi and sashimi on moving conveyor belts as well as popular Japanese cuisine such as teppanyaki.

'So far I think we've been seeing business as usual,' a spokeswoman for the firm told the AFP.

Customers appeared to be satisfied with assurances that the city's food regulator, the Agri-Food and Veterinary Authority, would screen incoming Japanese produce.

The nuclear crisis deepened Wednesday with another fire at the Fukushima plant, fears a reactor containment vessel may have been damaged, and a radiation spike that forced the temporary evacuation of workers.

Chief Japanese government spokesman Yukio Edano reported a sudden and brief rise in radiation levels at the facility.

In India, which also instituted checks on food imports from Japan, business remained brisk at Japanese supermarket Yamato-Ya.

'People are still buying our fresh fish and seafood,' Mukesh Rai, store accountant, told the AFP.

The store is well-known in New Delhi and imports seafood and packaged meat from Japan.

Japanese restaurants in Vietnam were similarly unaffected.

'We import notably Kobe beef and certain fish from Japan, whose safety is checked well before importation,' said Pham Minh Huyen, sales manager at Japanese restaurant Saigon Sakura in central Hanoi.

 

Japan faces 5-year road to reconstruction

Reuters, Amsterdam: Japan will take at least five years to reconstruct its earthquake and tsunami afflicted regions as it balances the need to rebuild houses, roads and power grids with planning for disaster-proof infrastructure.

As the world's third largest construction market, Japan has the resources, skills and social cohesiveness required to rebuild quickly, but that the disaster will spur it to think even harder about urban planning and protection, experts say.

'Reconstruction after the 1995 Kobe earthquake in Japan took a bit less than five years, I would expect reconstruction here to last five years,' said Abhas Jha, programme leader at the East Asia disaster risk management unit of the World Bank.

The world's third-largest economy, already saddled with public debt double the size of its $5 trillion output, must rebuild its infrastructure — from roads and rail to power and ports — on a scale not seen since World War Two.

Some cost estimates put the recovery and reconstruction bill at $180 billion, or 3 per cent of Japan's annual economic output, but the World Bank's Jha cautioned that such initial numbers usually get revised.

'This is a disaster of once in 100 or 200 years,' said Hirokazu Anai, senior analyst at JP Morgan Securities in Japan. 'This will force us to change the thinking of infrastructure and safety regulations and that will take time.'

The extension of damage from the 9.0-magnitude quake is still unclear. Planned blackouts including in the capital city of Tokyo aimed at saving energy in the wake of crisis at quake-hit nuclear plants are delaying economic activities as well.

Anai said it might take at least three months to be able to rebuild minimal roads to distribute water, food, and fuel to the quake-hit north-eastern Japan, with some towns completely wiped out by the tsunami. After that, the construction of temporary homes for survivors begins before starting a real rebuilding process, he added.

The rebuilding will give a short-term jolt to Japan's construction industry, which faces a bleak future of declining population, slow economic growth and high public debt that hampers future investment in major infrastructure projects.

This will buoy Japan's construction groups such as Kajima Corp and Taisei Corp as well as engineers who specialise in seismic — and increasingly tsunami — protection.

The market is also likely to keep an eyen on Penta-Ocean Construction, which specialise in shoreline and river protection work.

But the quake could also cool interest in investing in Japan and is likely to hurt corporate capital spending in the construction sector in the coming months, analysts said.

While the short-term needs of the population, from sanitation to a reliable power supply, will have to be quickly addressed, social planning takes longer, said David Alexander, professor of disaster management at the University of Florence.

'Few are the cases where reconstruction takes less than five years, because it's a case of not just physically doing it but also planning it, which requires things such as geotechnical surveys and sorting out land ownership,' he said on Tuesday.

Standard & Poor's said on Tuesday that Japan's central government will play a major funding role in the reconstruction drive but that local governments will also need to finance the efforts with their own bond issues.

'Research seems to show that building in safety into new investments adds about 5 to 7 per cent over the regular costs, but you more than make that up in terms of future reconstructions costs,' Jha said.

But the government will need to be careful not to make devastated regions too reliant on the construction sector.

'It is good practice not to have a boom and bust situation in which the only motor of the local economy is the construction industry. Reconstruction can finish without any other viable themes for the local economy,' Alexander said.

 

Japan earthquake loss likely to hit up to $200b

Reuters, Tokyo: Japan's devastating earthquake and deepening nuclear crisis could result in losses of up to $200 billion for the world's third largest economy but the global impact remains hard to gauge five days after a massive tsunami battered the northeast coast.

As Japanese officials scrambled to avert a catastrophic meltdown at a nuclear plant 240 km (150 miles) north of the capital Tokyo, economists took stock of the damage to buildings, production and consumer activity.

The disaster is expected to hit Japanese output sharply over the coming months, but economists warned it could result in a deeper slowdown if power shortages prove significant and prolonged, delaying or even scotching the 'v-shaped' recovery that followed the 1995 Kobe earthquake.

Most believe the direct economic hit will total between 10-16 trillion yen ($125-$200 billion), resulting in a contraction in second quarter gross domestic product but a sharp rebound in the latter half of 2011 as reconstruction investment boosts growth.

'The economic cost of the disaster will be large,' economists at JP Morgan said. 'There has been substantial loss to economic resources, and economic activity will be impeded by infrastructure damages (like power outages) in the weeks or months ahead.'

Japanese stocks suffered their worst two-day rout since the 1987 crash on Monday and Tuesday, losing a whopping $626 billion in value, before rebounding 5.7 per cent on Wednesday as hedge funds rushed to cover short positions.

But traders remained skittish, swayed by each new development at the stricken Fukushima power plant and alert to signs Japanese companies and insurers could sell sizeable foreign assets and repatriate funds to cover the costs of the nuclear crisis, quake and tsunami.

High-yield bonds and US Treasuries top the list of vulnerable assets should the triple disaster of earthquake, tsunami and nuclear breakdown prompt Japanese investors to bring overseas funds back home, analysts say.

Although the damage to infrastructure has been severe, some of the biggest risks to the economy may come from indirect market consequences of the disaster, such as a rise in the Japanese yen.

The yen surged to an all-time high against the dollar after the Kobe earthquake in 1995 as Japanese firms pulled funds home. The dollar has fallen 3 per cent against the yen since the disaster and is now close to the low hit after Kobe.

The direction of the yen could have a big impact on Japanese carmakers like Toyota Motor Co, Nissan Motor and Honda Motor, which build between 22 and 38 per cent of their cars at home.

HSBC chief economist Stephen King said it was still too early to put a figure on the economic costs as the scale of the disaster was not yet clear.

The area of Japan affected by the tsunami produces around 4.1 per cent of the country's GDP, suggesting first-round economic effects could be limited, he said. But with the fate of the Fukushima nuclear reactors still unclear, Japan may not have felt the full force of the disaster yet.

'At this stage, it's too early to come up with meaningful estimates of the overall impact of the terrible events in Japan,' King wrote in a research note.