The country's jobless rate rose to 5.3 percent, up for
the fourth consecutive month and hitting its highest level since November.
The actual number of jobless fell 1.1 percent from the
previous year to 3.44 million, according to the Ministry of Internal Affairs
and Communications. Those with jobs fell 0.3 percent to 62.8 million.
Meanwhile, industrial production retreated 1.5 percent in
June from the previous month as factories reduced output of large passenger
cars and cell phones. It was the first fall in fourth months and undershot
Kyodo news agency's market forecast for a flat reading.
"Industrial production continues to show an upward
movement although it has been pausing temporarily in part,» the Ministry of
Trade, Economy and Industry said in its report.
Companies surveyed by the ministry expect factory output
to fall 0.2 percent in July, then climb 2 percent in August.
Deflation persisted as Japan's core consumer price index,
which excludes fresh food, fell 1 percent from a year earlier in the 16th
consecutive month of decline.
The government's new high school tuition breaks weighed
heavily on prices, dragging education costs down 13 percent.
Friday's data highlight ongoing weaknesses in the world's
second largest economy even as Japanese companies report stellar quarterly
earnings. Thanks to strong overseas demand, major Japanese companies including
Sony Corp. and Panasonic Corp. rebounded back to profits in the April-June
period.
But with governments around the world phasing out
stimulus spending, growth is expected to slow in Japan and in major export
markets. A strong yen also poses a risk to corporate earnings and may drag
prices lower.
The core CPI for Tokyo - considered a barometer of
broader price trends - fell 1.3 percent in July, pointing toward another
nationwide drop this month.
Lower prices may boost individual purchasing power, but
deflation is generally bad for an economy. It plagued Japan during its
"Lost Decade" in the 1990s, hampering growth by depressing company
profits, sparking wage cuts and causing consumers to postpone purchases. It
also can increase debt burdens.
Japan's central bank says it does not tolerate deflation,
but it expects prices to continue falling for the next couple of years. The new
numbers may increase political pressure for the Bank of Japan to intensify the
fight against deflation.
In a separate report, the ministry said average monthly
household spending rose a real 0.5 percent in June.
