Japan jobless rate jumps to 5.4 percent

Staff and wires

TOKYO, Japan -- Japan's unemployment rate rose to 5.4 percent in May, leaving it above 5 percent for the eleventh straight month.

It was 5.2 percent in March and April, after hitting a postwar record of 5.5 percent in December 2001.

The latest figure, released Friday by the government, was above most analysts' expectations of about 5.2 percent and rekindles doubts about recovery in the world's second largest economy.

After three straight quarters of contraction to December 2001, Japan's economy grew a faster than expected 1.4 percent in the March quarter. This is an annualized rate of 5.7 percent.

But some economists have warned that the GDP figure, released on June 7 by the Cabinet Office, could be just a one-off spike.

They point to the unresolved problems confronting the administration of Prime Minister Junichiro Koizumi, including deflation, depressed consumer spending, the high level of bad loans weighing on banks, and opposition to structural reform.

Other indicators

Along with the jobless data, there were other indicators Friday on the state of the Japanese economy.

The Ministry of Economy, Trade and Industry said the country's industrial output in May rose 3.9 percent from a month earlier, after a 0.2 percent gain in April.

This was more than expected. But the government also forecast a slowdown in the months ahead, suggesting an export-led recovery may be hard sustain.

"Production is still the main driving force for the recovery," Mikihiro Matsuoka, senior economist at Deutsche Securities, told Reuters news agency.

Japan has been hit by a decade-long slump that has cost jobs in almost every sector, including manufacturing and construction.

Other figures released Friday by the Ministry of Public Management, Home Affairs, Post and Telecommunications show that spending by wage-earner households in May fell 0.4 percent year on year.

And there was no joy for the Koizumi administration in other data showing that the battle to combat deflation is far from won.

For the 32nd straight month, consumer prices fell in May. The nationwide core consumer price index dropped 0.8 percent from a year earlier.