Japanese unemployment rate hits 5.7%
Japan’s unemployment rate has reached a record high of 5.7% in July, up from 5.4% the previous month.
According to Government figures, over one million people have lost their jobs over the last 12 months, taking the unemployment total to 3.59 million, amid the worst recession in decades.
However, it was recently reported that Japan had emerged from recession after the economy grew by 0.9% in the second quarter, following four consecutive quarters of contraction.
Today’s unemployment news follows on from the announcement that exports in the world’s second largest economy fell last month raising concerns that global stimulus packages are starting to decline.
According to the Ministry of Finance, Japanese exports fell 36.5% in July on an annual basis and followed the 35.7% fall posted in June.
On a seasonally adjusted basis, exports fell 1.3% in July compared with the previous month.
In the meantime, Takehide Kiuchi, an analyst at Nomura bank, has warned that Japanese unemployment could reach 12.2% as companies wield the axe even further due to surplus labour.
There is more bad news for the economy as analysts fear for the threat of a short period of deflation after consumer prices fell by 2.2% year-on-year in July (the worst fall ever recorded).
Deflation was a problem for Japan during its so-called “Lost Decade” in the 1990s.
A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.
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