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Last Updated: Tuesday, 29 July, 2003, 05:32 GMT 06:32 UK
More jobs at last for Japan
A jobless man sleeps on a Tokyo street
Joblessness is still a severe problem
The number of people out of work in Japan dipped in June for the first time in three months, sparking a glimmer of hope about the prospects for its ravaged economy.

At the same time, household spending accelerated faster than at any time in 20 years.

The figures will come as welcome relief for Prime Minister Junichiro Koizumi, who later this year is facing both reselection as head of the ruling Liberal Democratic Party and a probably general election.

But relief was tempered by stubbornly weak retail sales, falling in June for the 27th month in a row.


Recent smoke signals have suggested that the worst could be over.

Prime Minister Junichiro Koizumi
The economy is still severe but I believe some bright signs have emerged
Junichiro Koizumi
Japanese Prime Minister
The big banks have been pushing hard to liquidate some of their multi-trillion yen load of debts gone bad.

Machinery orders shot up 6.5% in May, while business confidence measured by the Bank of Japan's quarterly tankan survey showed big manufacturers were less negative than at any time for two years.

Now the growth in employment - including self-employment - by 380,000 to 64.11 million has encouraged some to herald the long-awaited uptick.

Mr Koizumi was keen to see the bright side.

"The economy is still severe but I believe some bright signs have emerged," he said.

Mixed signals

But not everyone took so rosy a view.

The jobless data is still barely below the 5.5% peak recorded early this year, and government officials warned that the fall might well be the result of a one-off boost to the farm and medical sectors.

Even Economic and Financial Services Minister Heizo Takenaka was cautious.

The fall was a "good sign", he said. But he went on: "Conditions continue to be severe."

And despite the 4.8% gain in spending by households headed by a salaried worker in June from May, the fact that retail sales are still sliding overall gave some observers pause.

"(The jobs figure) is just a 0.1 percentage point change," said Naoki Murakami, economist at BNP Paribas.

"It's quite clear the economy is still flat."

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