Japan’s unemployment rate continued to grow while the rate of output slipped in June.

Unemployment grew by 0.1 per cent, reaching 5.3 per cent in June from the previous month. This rate is higher than the initial market expectation of 5.1 per cent.

Industrial output fell short of market expectations of a 0.1 per cent rise. Instead, it fell 1.5 per cent in June. The prospect for recovery driven by exports of automobiles and consumer electronics has been marred by the fall in output.

However, despite the gloomy outlook of the labour market and industrial production, Japan’s rate of consumer price decline eased for the second consecutive month.

The economy which has been mired in deflation saw the core consumer price index (CPI) – the indicator of price trends nationwide – fall by one per cent in June, year-on-year. This is smaller than market expectations of a 1.1 per cent decline.

The core CPI figure fell 1.5 per cent and 1.2 per cent in April and May respectively.

The worries that deflation may persist remain due to the uncertain outlook for European economies and that of the US.  

While fears that Japan’s export-driven economy may be adversely affect by global uncertainty, domestic demand is picking up. Average household spending in June rose by 0.5 per cent year-on-year, and 2.9 per cent higher month-on-month. Retail sales have also been on the rise since the start of this year.