Japanese jobless rate worsens, CPI drops

Japan's economic recovery remains on track despite figures Friday that showed a jump in the nation's jobless rate and a continued decline in consumer prices, the economy minister said.

But in some good news, the government said Japanese industrial production rebounded 3.4 percent in August after declining in July due to plant shutdowns after an earthquake hit north-central Japan, cutting supplies from a major auto parts maker.

The unemployment rate, meanwhile, worsened to 3.8 percent in August from 3.6 percent a month earlier, the Ministry of Internal Affairs and Communications said, the first rise since September 2006.

Japan's nationwide core consumer price index fell for the seventh straight month, falling 0.1 percent in August from a year earlier, the ministry said. That suggests Japan has yet to escape from deflation.

A lack of inflationary pressure will likely cast doubt on the Bank of Japan's decision to raise rates in the coming months, even as the central bank deals with lingering concerns over a U.S. economic slowdown and the fallout from the subprime mortgage problems.

Still, Economy Minister Hiroko Ota said Friday that Japan's trend toward economic recovery was continuing.

"Newly released data vary from one to the other, but the overall recovery trend is continuing," Ota said. "Although the consumer price index remained in negative territory, there is not much change in price conditions and an exit from deflation is in sight."

The core CPI for the Tokyo metropolitan area _ leading price indicator for rest of nation _ fell 0.1 percent in September from a year earlier. Economists had forecast a flat reading.

The rise in industrial production signals solid demand, the Ministry of Economy, Trade and Industry said. Output had fallen 0.4 percent in July, partly because of the quake.

Looking ahead, the ministry said it expects output to dip 0.8 percent in September and then increase 4.1 percent in October, based on surveys of companies.