Fears for Japan as unemployment rate hits 4.4%

| March 31, 2009

There is more bad news for Japan today after the statistics bureau in Tokyo announced that the unemployment rate has risen to a 3-year high of 4.4%, up from 4.1% in January.

The Government said that the number of people out of work in Japan last month stood at 2.99 million, up by 330,000 from the previous year.

The export-dependent economy, which was once seen as relatively unscathed by the global financial crisis, is being hit by a slump in demand for its products overseas. In response, companies have been cutting back by reducing headcount.

Meanwhile, The Labor Ministry said that the ratio of jobs available has fallen from 0.67 to 0.59 - the steepest drop in 35 years.

In addition, figures yesterday from the Ministry of Economy, Trade and Industry revealed that manufacturing output in Japan had fallen for five consecutive months.

Figures show that industrial production fell 9.4% last month, however, this was slightly better than the fall of 10.2% reported in January.

Separate figures, also released yesterday, from the Japan Automobile Manufacturers Association revealed that car production fell 56.2% in February to 481,396 vehicles - also the fifth consecutive monthly decline.

In the meantime, household spending was down by 3.5% in February compared to the previous year - this was the 12th monthly decline. Purchases by consumers make up for more than 50% of the economy.

According to economists, the world’s second largest economy is heading for the deepest recession since the World War II after it recently suffered its worst ever decline in 35 years. On an annual basis, the economy shrank at a rate of 12.7%.

In response, the Government is expected to announce a new stimulus package worth up to 20 trillion yen (£140 billion), in an attempt to drag the country out of recession.

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