Japan Jobless Rate Steadies; Prices Drop

TOKYO —  Japan’s jobless rate held steady in April at 5.2%, slightly better than expected, but consumer prices fell for a 31st month, underscoring the severity of a battle to curb deflation in the world’s second-largest economy.

The economy contracted for three quarters to the end of 2001, but rising exports, on the back of a global recovery and improvement in industrial output, have suggested the worst may be over.

Even so, economists put a big question mark over the sustainability of the turnaround, saying the outlook for corporate capital spending and personal consumption remains weak, while deflation has not gone away.

“Because the deflationary trend is severe, we must take solid measures to revitalize the economy,” Economics Minister Heizo Takenaka told a news conference.

Such steps are expected to include tax reforms to be compiled before Japanese Prime Minister Junichiro Koizumi meets President Bush and other leaders of the world’s seven richest nations and Russia at a June 26-27 summit in Canada. Japan is expected to be grilled at the Group of Eight meeting. Adding to the pressure, credit-rating company Moody’s Investors Service is expected to downgrade Japan’s local-currency debt rating today by one or two notches.

The nationwide core consumer price index fell 0.9% in April from a year earlier, dropping for the 31st straight month, government data showed today.

Unemployment was flat at 5.2% in April from March--not far from a postwar-era high of 5.5% in December. Most economists expected a jobless rate of about 5.3%.

There also appeared to be more jobs available in April. For every 100 job seekers at government-run job agencies, there were 52 job offers, up from 51 in March.