Japanese unemployment hit a three-year high while available new jobs sank to a six-year low in February, as a deepening recession puts more people out of work, potentially prolonging Japan's recession.
In further evidence of the pain for Japan in its worst recession since World War Two, household spending slid 3.5 per cent from a year earlier, suggesting weak domestic consumption will continue to weigh on growth as exports slide.
“Japan's economy is likely to have hit bottom in the first quarter of this year,” said Junko Nishioka, chief Japan economist at Royal Bank of Scotland.
“In usual times, it would then start to pick up, but now we can't expect that to happen. That means companies won't be able to raise cash flow and therefore will continue to cut jobs.”
At the heart of Japan's problems is a halving of exports in the space of a year, leaving its big car and tech manufacturers scrambling to lay off staff, cut production and slash orders from their myriad of small suppliers.
The purchasing managers index, an early indicator of the health of the sector, showed in March a 13th month of contraction was expected, although not quite as deep as last month.
Some analysts say unemployment may top 6 per cent and that rising joblessness has increased the pressure on Prime Minister Taro Aso ahead of a G20 summit in London this week and an election later this year.
He is expected to unveil an outline of a new stimulus package today, ahead of the gathering of the Group of 20 rich and major developing countries, with support planned for households to boost an economy suffering rising unemployment.
“We can't rule out a rise towards 6 percent, and in this environment salaries will fall further. The jobless rate may not peak this year. The outlook for consumption is pretty bad.”
There were only enough jobs available for just over half the available applicants as the jobs-to-applicants ratio fell to 0.59.
Hit by plunging global demand and weak consumption at home, Japan's export-reliant economy shrank 3.2 per cent in the fourth quarter, its fastest decline since the 1974 oil crisis and twice as fast as the US.
Analysts expect Japan's economy to keep shrinking in the first half of the year -- meaning a record five quarters of contraction.
Reuters