Japan Jobless Rate Jumps to a Three-Year High of 4.4%

Japan’s unemployment rate rose to a three-year high in February and job openings disappeared at the fastest pace in more than three decades as the export-led recession spread to households.

The unemployment rate climbed to 4.4 percent from 4.1 percent in January, the statistics bureau said today in Tokyo, the highest since January 2006. The ratio of jobs available to each applicant tumbled to 0.59 last month from 0.67, the biggest drop since December 1974, the Labor Ministry said.

Household spending fell for a 12th month as exporters from Toyota Motor Corp. to NEC Corp. reined in hiring and contained wages. Prime Minister Taro Aso has ordered his third stimulus package since October to prevent the economic slump from deepening as the nation heads for its worst recession since 1945.

“Japan’s labor market will keep deteriorating,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “The question is how much consumer spending will become a drag on the economy as wages and employment conditions worsen.”

The median estimate of 35 economists surveyed by Bloomberg was for the jobless rate to rise to 4.3 percent. Household spending fell 3.5 percent, a separate report today showed.

The yen traded at 97.39 per dollar at 8:40 a.m. in Tokyo from 97.36 before the report was published.

Oki Electric Industry Co., a maker of communications equipment, said it will cut administrative workers after a slump in demand forced it to widen its profit loss forecast this month.

Contain Costs

New jobs are also becoming harder to come by as companies try to contain costs. Toyota, the world’s largest automaker, this month said it will almost halve recruitment of new graduates in Japan to the lowest level in 14 years after forecasting its first loss in almost six decades. NEC Corp., Japan’s largest personal computer maker, said it plans to cut new hires by almost 90 percent to 100 people.

Bleak job prospects are taking their toll on consumers, whose outlays account for more than half of the economy. Retail sales fell at the fastest pace in seven years in February and weak demand prompted supermarket operators Ito-Yokado Co. and Seiyu Ltd. to cut prices of food, clothing and household products this month.

Some 77 percent of jobless people aren’t receiving unemployment benefits, the highest figure among Group of Seven nations except Italy, whose data weren’t available, the International Labour Organization said in a report last week.

‘Pretty Slow’

“The policy response has been pretty slow in creating a safety net for unemployment, which is putting downward pressure on the whole economy,” said Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo.

The jobless rate will reach a postwar high of 5.5 percent in the first quarter of next year, according to the median estimate of 14 economists surveyed by Bloomberg News.

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net