Joblessness still a drag on Japan's flagging economy

By Hans Greimel
Associated Press

TOKYO — Underlining Japan's gloomy economic outlook, the nation's unemployment rate held steady at 5.4 percent in September — hovering above the 5-percent mark for the 15th straight month, the government said yesterday.

Japan's persistent joblessness has also emerged as a new battleground within the ruling Liberal Democratic Party about how to revive the flagging economy, and has even stymied the release of the government's latest reform plans.

Since hitting a record 5.5 percent in December — the highest since the government began keeping track about 50 years ago — unemployment has not fallen below 5.2 percent.

The figures released by the government Labor Force Statistics Office continue to show an economy struggling to find new areas for growth.

Old jobs in manufacturing and construction are being eroded by a slowdown that the government acknowledges has lingered off and on for more than a decade. Emphasizing the trend, the government also announced today that the country's industrial output shrank 0.3 percent in September from the month before.

In August, the jobless rate stood unchanged at 5.4 percent. Japan's unemployment rate has steadily marked 5 percent or higher since June 2001. But the Bank of Japan's monthly report for October found no signs of an upswing.

Jobless people spend less, and in Japan, consumer spending accounts for roughly 55 percent of the economy.

The Japanese squeezed out 0.5 percent of growth in the April-June quarter but the economy shrank for four straight quarters before that — the first time Japan recorded a full year of contraction since the government began keeping comparable records in 1980.

The central bank also warned that a downward swing in world stock prices and an uncertain economic outlook in the United States and Europe could stall any forward momentum in Japan's export-driven economy.

The plunge on Wall Street has pushed down share prices in Tokyo. Over the past month, the major barometer for the Tokyo stock exchange has been fighting against 19-year lows.