Japan's Sun Rising After Gloomy 2004, Latest Data Signal; But 5.2 Mil Germans Jobless; Output, spending, hiring hint at Japanese recovery, but will it last this time?(A)

Byline: CHRISTINA WISE

A string of reports out this week fostered hope Japan may be shaking free of its recession even as Germany's labor slump worsens.

Japanese retail sales rose 2.2% in January from year-earlier levels, the best showing in six years.

Other data showed Japan's unemployment rate stayed at 4.5% in January -- a six-year low -- for a third straight month. Employers created 400,000 jobs.

Meanwhile, household spending, which accounts for more than half of Japan's GDP, swelled 8.2% in January from December, the largest jump in nine months. Industrial production grew 2.1% in January from December, also the best in nine months.

Patrick Fearon, an economist with A.G. Edwards, noted that when Japan's economy showed signs of life in late '03 and early '04, consumer spending didn't join in.

"It really has been a laggard, even earlier last year when growth looked pretty good," Fearon said. "Growth was coming from exports and capital spending, and we'd really like to see strong consumer spending on a sustained basis in Japan."