Japan’s Unemployment Rate Rose to Record 5.7% in July

Japan’s unemployment rate rose to a record in July, signaling households are unlikely to help sustain a recovery from the country’s worst postwar recession.

The jobless rate advanced to 5.7 percent, eclipsing the previous worst of 5.5 percent last seen in April 2003, the statistics bureau said today in Tokyo. Economists predicted 5.5 percent.

Companies from Toyota Motor Corp. to Japan Airlines Co. are scaling back and cutting jobs as demand weakens at home and abroad. Today’s report deals a blow to Prime Minister Taro Aso two days before an election that may oust his ruling Liberal Democratic Party for the second time in 54 years.

“The economy is the key factor for the election,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. “Voters naturally direct their frustrations about the slumping economy at the incumbent government.”

The opposition Democratic Party of Japan, which has never governed, is projected to win more than 320 of 480 seats in the Aug. 30 lower-house election, according to an Asahi newspaper survey published yesterday. Finance Minister Kaoru Yosano said this week the DPJ is “engulfing Tokyo like a massive wave.”

More than $2 trillion in stimulus plans worldwide helped Japan’s economy grow at an annual 3.7 percent pace last quarter, the first expansion in more than a year. Economists expect growth will weaken in coming quarters once the government cash injections are exhausted and the labor market worsens.

Job to Applicants

The jobs-to-applicants ratio, a leading indicator of employment trends, fell to a record 0.42 in July, meaning there are only 42 positions for every 100 candidates, the Labor Ministry said today. The unemployment rate will reach 5.9 percent next year, according to economists Bloomberg surveyed.