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Japan's May Jobless Rate At 9-Year Low

At 3.8 percent, jobless rate is lowest since March 1998; country's core Consumer Price Index also fell, down 0.1 from May 2006 levels.

TOKYO (AP) - Japan's jobless rate held steady in May at its lowest level in nine years, while the country's core consumer price index fell for the fourth straight month, the government said Friday.

The jobless rate stood at 3.8 percent in May, unchanged from April and its lowest since March 1998, the Ministry of Internal Affairs and Communications said. That beat the 3.9 percent figure forecast by economists surveyed by Dow Jones newswires.

The total number of jobless fell for the 18th straight month, decreasing by 190,000 from the same month a year earlier to 2.58 million, the Ministry said.

The unemployment data show that ''the overall economy is improving,'' top government spokesman Yasuhisa Shiozaki told reporters.

Meanwhile, the country's core CPI for May fell 0.1 percent from the same month the year before, the fourth straight monthly decline, the Ministry said. That was in line with expectations.

But the slight drop in the core index, which excludes volatile fresh food prices, may have little impact on market expectations that the central bank will raise interest rates, currently at 0.5 percent, in August. Bank of Japan Gov. Toshihiko Fukui has maintained that if the outlook for the economy is convincingly solid, increasing rates is possible even if consumer prices are falling slightly.

Shiozaki played down the price report, saying the data show the economy is ''exiting deflation,'' the state of falling prices that had gripped Japan for years during its lengthy slowdown.

''We will closely watch the economy while carefully monitoring risk factors so that the economy will not go back to deflation,'' he said.

In April, the core CPI also slipped 0.1 percent from a year earlier, after dropping 0.3 percent in March.

The core CPI for the Tokyo metropolitan area, considered a leading indicator for nationwide consumer prices, fell 0.1 percent in June, the data showed. That was worse than economists' forecast for a 0.1 percent on-year increase.

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