Japan’s unemployment rate rose to its highest level in more than five years as firms slashed jobs to cope with the worst recession since World War II, government data showed yesterday.
On a brighter note, consumer spending rose for the first time in 16 months, supported by the government’s economic stimulus efforts.
The unemployment rate climbed to 5.2 percent in May — a level last seen in September 2003 — up from 5 percent in April, the internal affairs ministry said.
Hopes are mounting that Japan’s economy has come through the worst of its export and production slump, but there are fears that unemployment will rise further as companies seek to recover from heavy financial losses.
The unemployment rate, which was slightly worse than expected, is close to a post-World War II high of 5.5 percent, which was last seen in April 2003.
The number of people in unemployment rose by 770,000, or 28.5 percent, from a year earlier to 3.47 million.
Many Japanese companies, particularly exporters, have moved swiftly to cut jobs and production in response to a slump in demand caused by the global economic downturn.
There were only 44 job offers for every 100 job seekers in May, a record low and down from 46 in April, a separate report from the labor ministry showed.
However, some analysts expressed optimism that the jobs market situation may start to stabilize before long.
“The jobless rate worsened slightly, but is almost peaking out,” said Hideyuki Araki, an economist at the Resona Research Institute.
However, others are more pessimistic.
The unemployment rate is likely to approach 6 percent by the middle of next year, warned Morgan Stanley economist Takehiro Sato.
Despite the worsening jobs market, Japanese household spending edged up 0.3 percent in May from a year earlier, marking the first increase in 16 months, government data showed yesterday.
Consumer spending is being propped up by the government’s economic stimulus measures, but the boost will eventually fade, UBS economist Takuji Aida said.
Spending will show “only a slight rise” in the July to September quarter because of a weak jobs market and sluggish wages, he said.
The government has announced a series of emergency spending packages to revive Asia’s biggest economy.
Other data underscored the weak state of the Japanese economy. Construction orders received by major 50 companies in May plunged 41.9 percent from a year earlier, the steepest drop since comparable records began in 1985.
Housing starts fell 30.8 percent in May from a year earlier, after a 32.4 percent drop in April that was the worst since 1974.