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Japan's jobless rate climbs

Japan's jobless rate climbed back to a record high of 5.5 percent in October and could rise further, as industrial output slumps, deflation deepens and household spending falters, official data showed yesterday.

The October unemployment rate was up from 5.4 percent in September, the Ministry of Public Management, Home Affairs, Posts and Telecommunications said.

"The jobless figures were the worst since the end of World War II and will continue to remain high given the severe economic condition," said Hidehiko Fujii, an economist at Japan Research Institute.

The jobless rate for men jumped to an all-time high of 5.9 percent from 5.8 percent in September and that for women hit 5.1 percent from 4.9 percent.

"Apart from ongoing corporate restructuring, men were losing jobs because their companies went bankrupt," Fujii said.

The number of people out of work surged to 3.62 million in the month, up 100,000 from a year earlier, marking the 19th consecutive monthly increase.

Japan's jobless rate previously hit 5.5 percent in December last year.

Economists said the jobless rate would remain under pressure as more companies were slashing staff and wages to boost profitability.

"Companies had no choice but to cut more jobs and wages because their profits were so meager under the current economy," said Masahi Murata, an economist at UFJ Institute.

Troubled computer maker Fujitsu Ltd. said last month it would cut 7,100 jobs in the year to March in a bid to stem its extensive losses.

"Workers, for their part, continued to worry about their future and job security and had no inclination to spend freely," the economist noted.

Spending by salaried households declined 0.7 percent year-on-year in October after rising 4.1 percent the previous month, the ministry said. Wage income fell 1.6 percent to 472,935 yen (US$3,880).

Adding to the gloom, Japanese consumer prices in October slipped 0.9 percent year-on-year, marking the 38th consecutive monthly drop.

Deflation deters consumption as people wait for prices to fall further. This has the consequent effect of eating into corporate profits and hindering economic growth.

Last week Prime Minister Junichiro Koizumi ordered an extra budget for the current financial year. He did so in an attempt to halt sliding prices and end a 12-year slump in the world's second largest economy.

The package will include an extra three trillion yen (US$24.6 billion) for public works projects and a social safety net.
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