TOKYO (AP) -- Japan's economy grew even sicker in February as the unemployment rate jumped to a three-year high and families sharply cut spending, underscoring the government's growing sense of urgency that it needs to mount a bigger defense.
The jobless rate in the world's second-largest economy rose to 4.4 percent -- the highest level since January 2006, the government said Tuesday. Meanwhile, household spending, a key measure of individual consumption, tumbled 3.5 percent from a year earlier.
The latest figures are among a slew of major indicators this week that so far have highlighted the ferocity of the global downturn. Next up Wednesday is a key survey of business sentiment that may hit an all-time low.
Prime Minister Taro Aso is expected to unveil new stimulus measures during the upcoming Group of 20 summit in London, on top of about 12 trillion yen ($122 billion) in public spending announced last year.
Finance Minister Kaoru Yosano, who will also attend the G-20, has suggested that the government may need to spend up to 20 trillion yen in a new package but said Tuesday that the amount remains undecided, according to Kyodo news agency.
Japan, which has relied on foreign sales of its cars and gadgets to drive economic growth, now finds itself mired in its deepest recession since the end of World War II as the world's consumers slash spending.
Data last week showed that exports nearly halved in February, which led to sharply lower industrial production.
Factory output tumbled 9.4 percent in February from the previous month, the government said Monday, with especially steep cutbacks among makers of motor vehicles and general machinery. The figure marks the fifth straight month of decline and follows January's record 10.2 percent plunge.
In response to the unprecedented collapse in global demand, major exporters including Toyota Motor Corp. and Sony Corp. have moved quickly to adjust by reducing shifts, suspending factory lines and slashing thousands of workers.
Their aggressive moves have suppressed inventory levels, which dropped 4.2 percent in February in the second straight month of decline.
That's at least some positive news for companies, but a troubling sign for families losing those jobs.
The number of unemployed surged 12.4 percent from the previous year to 330,000, the government said. And the ratio of jobs to applicants dropped to 0.59, meaning there were 59 positions available for every 100 job seekers.
"In a sense, it is a zero-sum game with only one side able to 'win' in 2009," said Kyohei Morita, chief economist at Barclays Capital in Tokyo. "Compared with past recessions, manufacturers are keeping their inventories under control. To avoid overproducing, however, they have had to avoid over-employing."
The Bank of Japan will follow Wednesday with the results of the closely watched "tankan" quarterly business survey. The report, which polls 10,000 companies, will likely show that business confidence has plunged to its lowest-ever point.
Economists also expect the tankan to show historic cuts in companies' capital investment plans.
"While the anticipated pace of deterioration and the level of the (tankan's main index) are breathtaking, these dramatic numbers are no longer surprising after the incredible fall in major economic indicators, including GDP" in the fourth quarter, said Masamichi Adachi, senior economist at JP Morgan in Tokyo.
Japan's gross domestic product shrank by an alarming 12.1 percent annual rate in the October-December quarter. The contraction is the severest for Japan since the oil shock of 1974 and is double the pace of the decline in the U.S.
Still, some recent forecasts offer slivers of hope.
The Ministry of Economy, Trade and Industry predicts industrial production will rise 2.9 percent this month and climb 3.1 percent in April as the country's factories begin to stir.
Along with slimmer stockpiles, Japanese exporters are cautiously optimistic about the U.S. and China -- their two biggest markets and the keys to an economic recovery.
Adachi also predicts that consumer spending may rebound in the near future despite a deteriorating labor market. The government has begun distributing 2 trillion yen in cash handouts approved as part of Aso's revival plan, and lower highway tolls are expected to boost leisure spending, he said.