Japan announced yesterday that its jobless rate returned to a record 5.5 percent in December as Prime Minister Junichiro Koizumi pledged "every possible policy measure" to engineer an economic recovery.
Unemployment rose from 5.3 percent in November and matched the record level of October as companies trimmed their workforces, said the Ministry of Public Management, Home Affairs, Posts and Telecommunications.
Japan's average unemployment rate last year also broke records at 5.4 percent, up from 5 percent in 2001.
Other data showed a continuing fall in prices and a decline in household spending in December. Economists said the spending figures were worrying because consumer demand had been one of the few bright spots in the economy earlier last year.
Koizumi called for patience, saying the nation was "halfway along the road of reform and it needs some more time before results begin to be clearly seen."
"In order to revive the Japanese economy, it is necessary to mobilise every possible policy measure," he said in a policy speech in parliament, although he did not announce any concrete measures.
December's jobs figures revealed a significant decline in employment at large firms, an official of the public management ministry said.
The number of workers at firms having at least 500 employees fell 280,000 in December from a year earlier in the 20th straight month of decline.
Other government data also painted a gloomy picture of the Japanese economy.
The planning ministry said prices in Japan fell 0.9 percent last year in the sharpest annual fall on record. Prices in December fell 0.3 percent from a year earlier in the 40th straight monthly fall.
The grim data helped drive Tokyo shares towards a 20-year closing low in morning trade, but the benchmark Nikkei 225 index managed to end higher on speculation public pension funds would buy shares to prop up the market.
The Nikkei ended the day 23.13 points or 0.3 percent higher at 8,339.94.
Toshio Sumitani, economist at Tokai Tokyo Research Centre, said the economy was clearly deteriorating.
"The jobless rate will worsen further, going beyond 5.5 percent and coming closer to 6 percent," he said.
"Domestic demand continues to be weak ... private sector demand has shown no signs of picking up and public works have been cut," he said.
Exports have supported production but it was unlikely they would remain strong this year, with auto shipment growth to the US expected to slow, he said.
Another government report said spending by salaried workers' households fell 0.2 percent in real terms last year because of jobs losses and tight wages. The spending was down for the fifth straight year, the longest decline since comparable data was first recorded in 1964.
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