Japanese Unemployment Surges, Spending Falls

Japan got a triple dose of bad economic news as spending dropped sharply, jobless rate hit a two-year high and industrial production at the nation's vital manufacturers declined.

TOKYO (AP) -- Japan got a triple dose of bad economic news Tuesday when numbers showed that family spending dropped sharply, the jobless rate rose to a two-year high and industrial production at the nation's vital manufacturers declined.

That adds to growing evidence that an already faltering economy remains fragile amid a global slowdown and financial market turmoil.

Japan's jobless rate rose in August to 4.2 percent -- the highest level in more than two years and up from 4 percent in July, according to the Ministry of Internal Affairs.

Separate government data showed that monthly household spending, a key barometer of consumer demand, fell 4 percent in August from a year earlier to 291,154 yen ($2,781) as families cut back on housing, education and recreational expenses.

The steep drop took JP Morgan Securities economist Masamichi Adachi by surprise, though he acknowledges the figures are "consistent with the deteriorated environment."

"Looking ahead, while the recent slide in commodity prices should be positive for the real purchasing power for the household and corporate profits, the recent shock in the international financial markets most likely will affect negatively to the spending of both corporate and household through various routes, including export volume and stock prices," Adachi said in a report.

The government also said that Japanese industrial production declined 3.5 percent from July, the first fall in two months, amid slower output by makers of transport equipment, general machinery and electric machinery.

The jobs report showed that the number of unemployed persons stood at 2.72 million, a 9.2 percent increase from the previous year, while the number of employed persons fell 0.6 percent from a year earlier to 64.05 million.

Stock markets around Asia plunged Tuesday after U.S. lawmakers rejected a $700 billion bank rescue plan triggered a historic sell-off on Wall Street.

The benchmark Nikkei stock 225 index fell 483.75 points, or 4.12 percent, to close at 11,259.86 -- the lowest level since June 9, 2005.

Prime Minsiter Taro Aso urged Japanese financial officials to closely monitor the situation and take appropriate measures to protect Japan's economy, according to Kyodo News agency.

"We have to respond appropriately in order not to affect the Japanese economy and to prevent the financial system from falling apart," Aso was quoted as saying.

On Wednesday, the Bank of Japan will release its closely watched "tankan" survey of business confidence, which polls more than 10,000 companies across the country. Economists predict the quarterly report to reveal a significant deterioration in business confidene among the vital large manufacturers amid slowing overseas demand.

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