Jobs disappear in Japan

Japan's 5% unemployment rate could be just the start

Recession is looking near-inevitable for Japan after a clutch of economic figures showed the country's unemployment rate breaking new records, while consumers remain shy.

Industrial production figures, too, proved disappointing, with a rise in output well short of expectations as companies continued to run down their inventories.

The data demonstrates that well before the economic shock administered by the attacks on the US, Japan was already in dire straits.

"The figures show how severe economic conditions were before 11 September, and it is difficult to assess how much shock the events since then have caused to the economy," said Heizo Takenaka, the country's economics minister.

No more jobs for life

For the fifth month in a row the number of people out of work in Japan climbed, with August 2001 showing a 260,000 rise over the year before.

The total of 3.36m is now over 5% of the workforce.

To make matters worse, the number of jobs on offer is shrinking, with August's figure of 583,510 down 3.6% year on year.

Seasonally adjusted figures for August show 59 jobs for every hundred applicants, down from 60 in July.

Debt crisis

And with bad debts still crippling corporate Japan, economists say things are certain to get worse before they get better.

The banks alone have bad debts estimated at about 150trn yen ($1,250bn), over 30% of gross domestic product.

The government has still to announce exactly how it will tackle the problem, and has launched a private sector experts' panel to advise on the issue.

But whatever happens, Prime Minister Junichiro Koizumi's promise to sort out the issue - which has depressed Japan for a decade - within three years will mean hundreds of thousands more job losses.

Consumer gloom, industrial stagnation

The rest of the economic news was little better.

Industrial production in August rose 0.8% month on month, but the rise fell well short of the consensus forecast by economists of 2.8-3%.

September's figures are forecast by the Ministry of Finance to drop 1.9%.

"The results were extremely poor," said Shinichi Sato, who manages investment strategy at Tokyo Mitsubishi Securities.

Comparing this August with a year ago, he said, production had fallen 11.7%.

"A year-on-year fall of more than 10% had happened only once before in the last 20 years, which was in 1998."

And Japanese consumers are still staying away from the shops, according to the wage earners' households' spending survey.

August's figure showed a 0.8% drop in real terms from the year before, to 326,938 yen ($2,733) - again a five-month straight decline.

Intervention continues

The government is trying to help export businesses by intervening in the money markets seven times in two weeks.

The move has seen the yen drop back towards a rate of 120 to the dollar, having nudged higher earlier in the week.

The finance minister, Masajuro Shiokawa, refused to rule out further activism.

"Given the state of the current economy, which is in a recessionary phase, and given the problem of prices, I have been thinking that a weaker yen would be favourable," he said.

Negative outlook

The figures offer a bleak confirmation of the gloomy outlook presented earlier in September by the government's quarterly economic report.

The report, prepared before the attack on New York and Washington DC, warns that the global slowdown means more pain ahead.

"The economy continues to deteriorate," the report said, in words almost unchanged from the last survey three months earlier.

"The outlook presents worrisome factors, such as a further slowdown in the global economy and the high level of the inventories-to-shipments ratio."