Japan's jobless soars to record

JAPAN'S jobless total reached a record 5.6% of the population in December, up from 5.5% in November as consumer spending continued to decline and industrial production fell, according to figures just published.

December's rise made the annual increase in unemployment last year the third steepest on record as the year's manufacturing output also fell to record lows, even though December was unexpectedly buoyant.

Unemployment looks set to go even higher as the prospects of a turnaround in demand were further dampened by a 6.9% month-on-month decline in household spending in November. This left the total for the year down by 4.4%.

Economics Minister Heizo Takenaka warned that because unemployment is a lagging figure, it is likely to get worse as the recession deepens. 'Labour market conditions are very severe,' he said as the number of vacancies also dropped. The government is attempting to pump up the economy, with a secondary 2.64 trillion yen (£13.8bn) budget that was expected to be passed by Japan's lower house today. It will pour money into roadbuilding and other construction projects.

The biggest number of jobs lost was in the manufacturing and construction sectors as Japan's giant companies abandoned lifetime employment policies to protect profits and balance sheets. More jobs are being exported as leading companies shift their production to the cheaper labour markets of China.

Analysts played down a 2.1% rise in industrial production last month, attributing it to an upward blip in electronics output. Production in the three months to the end of December was down 2.3% over the previous three months, the fourth consecutive quarter of declining output.

Finance Minister Masajuro Shiokawa said the jobless rate was likely to stay at high levels. 'This will probably continue. Businesses have just started to restructure,' he said.

Meanwhile, Bank of Japan Governor Masaru Hayami sought to quell recent speculation that the financial authorities were aiming to weaken the yen to stimulate the economy. 'There is a need to understand fully that a weak yen would not solve the many problems Japan must overcome,' he said in a speech in Tokyo.