Japan Jobless Rate Hit Record High in July

Japan’s unemployment rose to an all-time high in July, and prices fell at a record pace, the government said Friday.

The jobless rate in the world’s No. 2 economy hit a seasonally adjusted 5.7 percent, the highest level in the post-World War II era and worsening from 5.4 percent in June, according to the Ministry of Internal Affairs and Communications. The previous record was 5.5 percent, last hit in April 2003.

The total number of jobless in July jumped 40.2 percent from a year earlier to 3.59 million. Those with employment fell 2.1 percent to 62.7 million.

The labor ministry also reported Friday that the ratio of job offers to job seekers in July fell to an all-time low of 0.42. That means there were 42 jobs available for every 100 job seekers.

The specter of deflation intensified amid the labor market worries.

Japan’s key consumer price index, which excludes volatile fresh food prices, tumbled a record 2.2 percent in July from a year earlier, the government said.

Lower prices may seem like a good thing, but deflation can hamper growth by depressing company profits and causing consumers to postpone purchases, leading to production and wage cuts. It can also increase debt burdens.

The nationwide core CPI, which excludes volatile fresh food prices, has dropped for five straight months. The figure marks steepest decline since the officials began compiling comparable data in 1971.

The core CPI for Tokyo retreated 1.9 percent in August, suggesting that prices nationwide are headed further south. Prices in the nation’s capital are considered a leading barometer of price trends across Japan.

Meanwhile, a separate government report showed that families spent less. Average household spending, a key barometer of individual consumption, in July declined 2 percent from a year earlier.

8/27/2009 8:05 PM TOKYO (AP)