Juliet Hindell reports on one of the responses to unemployment in Japan: suicide

The total number of people out of work was 3.29m, 15.8% higher than in June last year.

Consumer prices remained flat or in decline, suggesting that deflation fears will force the Bank of Japan to keep interest rates at rock bottom.

Prime Minister Keizo Obuchi told the cabinet he wanted to remain flexible in fiscal policy, saying he was thinking about a supplementary budget to stimulate the economy.

Men hit harder

The jobless rate topped the previous record 4.8% rate of March and April and exceeded economists' expectations.

The rate for men climbed to a record high of 5.1% in June, while the rate for women dipped to 4.4%, slightly below the March high.

There were only 46 jobs for every 100 applicants in June, unchanged from May and reflecting generally severe economic conditions.

"I would say we have to expect rising unemployment for another two to three-year term," said Toshihiko Yamagami, senior economist at Sumitomo Life Research Institute.

Yamagami noted the rise in joblessless in the construction and manufacturing sectors, saying it was harder for workers trained in those sectors to get jobs in other industries.

Tight rein

Joblessness is among the worries prompting consumers to keep a firm grip on their wallets.

Spending by Japanese wage-earners' households in June fell 1.8% in real terms from a year earlier. Spending had risen in May for the first time in four months.

Households spent 72.2% of their disposable income, down from 72.4% in May.