[July 28, 2008]

2ND LD: June jobless rate worsens to 21-month high of 4.1%+

(Japan Economic Newswire Via Acquire Media NewsEdge) TOKYO, July 29_(Kyodo) _ (EDS: ADDING COMMENTS OF ECONOMIST, ECONOMIC MINISTER OTA AT 8TH TO 12TH GRAFS)

Japan's seasonally adjusted unemployment rate in June worsened 0.1 percentage point from May to 4.1 percent, the highest level in 21 months, prompting the government to revise downward its assessment on employment conditions, the internal affairs ministry said Tuesday.

The number of jobless people totaled 2.65 million, up 240,000 from a year earlier, which was the largest growth since a gain of 250,000 recorded in August 2002, the Ministry of Internal Affairs and Communications said in a preliminary report.

It was the third straight month of increase following an expansion of 120,000 in May. Both the number of those who voluntarily quit their jobs and that of those dismissed from them were on the rise in the reporting month.

The ministry downgraded its basic assessment on employment conditions for the first time in 10 months, saying the future course of the situations "requires close monitoring." Between March and May, it had said a recovery in the country's employment "has stalled."

A ministry official indicated that the downward revision corresponds to the fact that the unemployment rate exceeded the range of 3.8 to 4.0 percent in which it had mostly stayed recently.

A separate report, which the Ministry of Health, Labor and Welfare released, said the ratio of job offers to job seekers in June was at a seasonally adjusted 0.91, down from 0.92 in May.

That means there were 91 jobs available for every 100 job seekers. It was the lowest figure since February 2005, when the same 0.91 was recorded.

Economic and Fiscal Policy Minister Hiroko Ota said at a press conference that the latest data "are not good figures at all."

"The recovery in employment conditions has hit a lull, reflecting a pause in the improvement of the nation's overall economy. We will closely follow future developments," she said.

The June unemployment rate was above the average market projection of 4.0 percent in a Kyodo News survey. The job-offers-to-job-seekers ratio matched the average market forecast.

Tomoyuki Ota, senior economist at the Mizuho Research Institute, said the deteriorating employment data suggest that companies are refraining from hiring workers amid a slump in domestic demand due to an increase in prices of food and everyday goods.

"The unemployment rate will likely hover in a range of 4.0 to 4.2 percent until the fall," Ota said. But he denied the possibility that the rate will continue to crawl up, as many Japanese firms still face a labor shortage over the long term due to the retirement of baby boomers.

"Companies have been laying off part-time workers and day laborers but they have not yet substantially cut the number of full-time workers," he said.

The number of job offers in June dipped 0.6 percent from the previous month and that of job seekers rose 0.9 percent, the labor ministry said.

The number of new job offers fell 17.9 percent from a year before.

According to the internal affairs ministry, the jobless rate for men stood at 4.2 percent in June, staying flat from May, but the rate for women climbed 0.3 percentage point to 4.0 percent.

The official said the number of women who voluntarily quit their jobs and who newly started job searches to earn money increased in the reporting month.

The number of jobholders sank 400,000 from a year earlier to 64.51 million, registering the largest decline since a fall of 550,000 in February 2003. It was also the fifth straight monthly drop.

The number of male jobholders totaled 37.47 million, down 390,000 from a year before, logging the largest decline since a drop of 400,000 in March 2003. That of female workers was down 30,000 to 27.03 million.

The number of people who voluntarily quit their jobs rose 70,000 to 1.01 million from a year earlier, while the number of people who were laid off totaled 590,000, up 40,000.

Among the jobless people, the number of household heads rose 170,000 from a year earlier to 680,000. It was the third straight month of increase and the biggest growth since a gain of 180,000 recorded in November 2001. "This is a worrying sign," said the official.

By industry, the number of jobholders fell from a year before in the manufacturing and transport sectors. The official said surges in energy prices may have affected the transport sector.

By company size, the number of employees shrank in firms with less than 500 workers compared with a year earlier, but rose in companies with staff of 500 or more. The results underline the gap in business confidence between small and large firms.

Copyright ? 2008 Kyodo News International, Inc.

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