Japan's jobless hits record 5.6 percent


Japan's jobless rate for 2001 was 5.0 percent, with the figure reaching a record 5.6 percent in December

By CNN's Geoff Hiscock and agencies

TOKYO, Japan -- Japan's battered economy took another blow Tuesday as the government released data showing the unemployment rate rose to a record 5.6 percent in December.

The seasonally adjusted figure compares with a rate of 5.5 percent in November.

The Ministry of Public Management, Home Affairs, Posts and Telecommunications said the number of unemployed rose for the ninth straight month to 3.37 million.

This was 390,000 more than in December last year.

For all of 2001, the jobless rate rose to 5.0 percent, from 4.7 percent in 2000.

Companies such as leading chipmakers Fujitsu, Toshiba, NEC and Hitachi, along with banks and industrial manufacturers, have cut thousands of jobs in recent months as they seek to to reduce costs and stay afloat.

The dismal job outlook comes as Japan, the world's second largest economy, struggles with its fourth recession in a decade and a host of problems that range from a mounting pile of bank debts to price deflation and a resistance to fundamental structural reform.

Deflationary spiral worry

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Commerz Securities Japan chief economist Ron Bevacqua told CNN television Tuesday that employment in Japan's manufacturing sector was being hit hard by the downturn.

The construction sector, where there had been chronic over-employment for decades, was also in the firing line, he said.

Bevacqua said Japan had been operating in a controlled deflationary environment for the past few years. But the country was now moving to a "potentially very dangerous situation" of an uncontrolled deflationary spiral.

Reacting to the jobless figures, the Tokyo Stock Exchange's benchmark Nikkei 225 index slipped about 44 points or 0.43 percent to 10,176.43 in early trade.

The yen was trading at about 133.56 to the U.S. dollar just after 9 a.m. Tokyo time.

Data released Tuesday by the Ministry of Health, Labor and Welfare showed the seasonally adjusted jobs-to-applicants ratio was 0.51 in December, meaning there were just 51 openings for every 100 job seekers.

This was down from 0.53 in November.

Industrial output up


The outlook is for a 1 percent economic contraction this year

There was brighter news from some other figures released Tuesday, with the Ministry of Economy, Trade and Industry (METI) reporting that Japan's seasonally adjusted industrial output rose 2.1 percent in December from a month earlier.

That was better than a median forecast of a 1.5 percent gain from a Reuters survey of 15 economists conducted last week.

Nikko Salomon Smith Barney economist Tomoko Fujii told Reuters the rise in industrial production was due to export demand.

But Fujii said that as companies step up their restructuring efforts, that will put pressure on jobs and capital spending.

Average spending by households of Japanese wage earners fell a real 4.4 percent in December from a year earlier, the first decline in three months.

Economy to contract about 1 percent

The government of Prime Minister Junichiro Koizumi is endeavoring to resuscitate the Japanese economy with a series of stimulus measures and the promise of restructuring, but the outlook remains subdued for 2002.

Most analysts see Japan's economy contracting by about 1 percent this year and growing by about 0.9 percent next year.

Last week, Japan revealed that its trade surplus fell by 38 percent in 2001 to 6.61 trillion yen ($49 billion).

That was its biggest drop since 1970 and a third straight year of decline, as export markets dried up.

The Ministry of Finance said Japan's surplus with the United States -- its largest trading partner -- fell for the first time in five years, down 6.8 percent to 7.06 trillion yen ($53 billion).