Tough times for jaded japan

Japan's economy has taken a battering over the last month…

The unemployment rate rose to 4% in April, the highest rate since September and up from 3.8% the previous month. Other figures showed household spending in April was down 2.7% on the year before, which was much worse than a predicted fall of 0.9%.

The annual rate of inflation slowed to 0.9% in April, but the decline was due to temporary suspension of a fuel tax. Last month, Japan's central bank cut its growth forecast for the current financial year to 1.5% from 2.1%, amid continuing worries about the impact of the US slowdown on global markets.

Keiji Kanda, an economist at think tank Daiwa Institute of Research commented: “The increase in the unemployment rate was triggered by job losses among construction firms. Amid a slump in the economy, conditions of employment are not improving.

Takeshi Minami, chief economist at Norinchukin Research Institute added: "Prices are rising, but we need to note that they are hurting consumer sentiment at the same time. Markets are worried about inflation and talk about a rate hike, but any premature rate rise could bring down the economy, so that should be tackled with a balanced approach”.