/www.bloomberg.com/ By Kanako Chiba
Tokyo, Nov. 29 (Bloomberg) -- Japan's unemployment rate rose in October to match a record as government pressure on banks to write off bad loans forced companies such as Kotobuki Industry Co. and Nisseki House Industry Co. into bankruptcy.
The unemployment rate rose to 5.5 percent from 5.4 percent in September, a government report said, matching December's record and economists' expectations. The number of unemployed rose to 3.7 million.
The drive to dispose of an estimated 52.4 trillion yen ($429 billion) of banks' bad loans will force more companies into bankruptcy as banks cut off delinquent borrowers, pushing unemployment higher, economists said. A slowing economy will add to the ranks of the jobless.
``The outlook for the job market is pretty grim,'' said Takeshi Minami, a senior economist at UFJ Capital Market Securities. ``The unemployment rate may rise as high as 6 percent sometime next year.''
Japanese 10-year bond futures for December delivery rose 0.02 to 142.30 as of 9:21 a.m. in Tokyo after earlier rising to a record high of 142.38.
Building material supplier Kotobuki owed 18.6 billion yen and affiliate Nisseki House 17.5 billion yen when they filed for bankruptcy after Mizuho Corporate Bank Ltd. and other lenders cut off credit. A total of 29 publicly traded companies have failed in 2002, already double last year's record of 14.
Japan's banks are bracing for a plan by Financial Services Minister Heizo Takenaka that may force them to increase the pace of bad-loan write-offs, and let more indebted companies fail. His draft plan, obtained by Bloomberg News on Wednesday, gives few specifics on the new criteria for dud loans. Takenaka said he plans to announce details of the plan today.
Household Spending
Spending by households headed by a salaried worker declined 0.7 percent in October from a year earlier, another government report showed. It fell 2.7 percent from September. Also, the propensity to spend ratio fell to 72.7 from 75 in September.
Japan's economy grew 0.7 percent in the third quarter, less than a revised 1 percent gain in the second. Export growth, which accounted for about half of the second quarter's expansion, slowed to 0.5 percent in the third quarter from 5.9 percent.
The slowing economy and government pressure to force banks to cut off deadbeat borrowers pushed 1,730 companies into bankruptcy last month, including three publicly traded ones.
So far this year 16,231 companies have gone bust, a pace of about 53 companies a day. Tokyo Shoko Research Ltd. says that bankruptcies in the last two months of the year may accelerate and exceed last year's 17-year high of 19,164 cases.
The Bank of Japan and the government both cut their assessments of the economy this month for the first time in about a year, saying exports and production are stalling as global growth slows.
There were 56 jobs per 100 applicants in October, up from 55 in September, a separate government report showed.