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. Last Updated: 07/27/2016

Japanese Joblessness Climbs to New High

TOKYO -- Japan's unemployment rate climbed to a record high for the fourth straight month in December and household spending sagged, providing little hope that the world's second-largest economy will pull out of recession any time soon.

Industrial output gained for the first time in four months, but government officials were quick to play down any notion that this might be the start of a convincing recovery.

Japan's jobless rate rose to 5.6 percent in December, up from 5.5 percent in November, according to the Public Management, Home Affairs, Posts and Telecommunications Ministry.

It was the highest rate since unemployment records began in their current form in 1953.

Separate data showed that average spending by households with wage-earners fell sharply, down a real 4.4 percent in December from a year earlier, the first decline in three months.

The politically sensitive unemployment rate rose as recession and tough competition forced companies to shed more workers.

Prime Minister Junichiro Koizumi has come under pressure to increase spending to boost the economy, but has stuck to his line that structural reform is needed for long-term growth, even if that brings short-term pain.

Finance Minister Masajuro Shiokawa said the jobless rate would probably stay at high levels.

"This will probably continue," he told a news conference. "Businesses have just started to restructure."

To cope with the deteriorating economy, the government has compiled a 2.64 trillion yen ($19.77 billion) extra budget that is expected to pass the lower house later Tuesday.

The passage of the budget bill was supposed to have taken place Monday, but was delayed after opposition lawmakers walked out in protest at a feud between Foreign Minister Makiko Tanaka and ministry officials.

It is the second supplementary spending package for the current fiscal year ending in March.

Bank of Japan Governor Masaru Hayami on Tuesday sought to quell recent speculation that the financial authorities were aiming to weaken the yen to stimulate the economy.

"There is a need to fully understand that a weak yen would not solve the many problems Japan must overcome," he said in a speech in Tokyo.

"That Japan, with such a big economy, would try to resolve its problems by manipulating foreign exchange rates would undermine international trust in Japan's economic policy and its currency," he added.

Those comments pushed the yen up to around 133.15 to the dollar from around 133.40 yen in midday trade. The yen has fallen to three-year lows against the dollar recently.

Rising unemployment has cast a shadow over hopes of a rise in personal consumption, which accounts for about 60 percent of gross domestic product.

GDP is expected to contract by about 1 percent in the fiscal year ending in March and the government is forecasting zero growth the following year.

"We cannot be complacent about the economy," said Trade Minister Takeo Hiranuma. "There is a serious risk of an economic downturn if the U.S. economic recovery undercuts expectations."