Jason Kelly

Here in Japan, people are wondering where talk of recovery is coming from. The world's second-largest economy just reported a 5.4% unemployment rate, its worst in six years. The total number of jobless in June grew 31% from a year earlier, to 3.5 million.

Word on the street is that big companies massaged the books to make it look like things are getting better, but workers don't see it. Just ask anybody holding down a part-time, unskilled job to make up for a pay reduction or cutback in hours.

Even off the street, in the high-rises, data watchers are on to the same idea. "Employment conditions are taking another turn for the worse," wrote Credit Suisse Japan chief economist Hiromichi Shirakawa. "It is disappointing that the recovery in manufacturing has failed to halt the decline in the number of people employed in the manufacturing sector."

It sure is. It's even more disappointing that most companies are looking to cut payrolls further to lower costs even more in anticipation of slow sales for a while yet. The labor ministry reported Friday that there are only 43 jobs available for every 100 job seekers, the lowest that ratio has ever been.

Maybe that's why deflation is on Japan's mind. Its consumer price index dropped 1.7% in June from a year prior, and has fallen for four months in a row. That's the measurement's most precipitous plunge since the government started tracking it in 1971.

My friend who is an engineer by profession currently works weekends at a pub, earning not much more than minimum wage. "Anything helps," he told me.

Posted by Jason Kelly at 6:43 PM Japan time
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