New figures show that Japan's unemployment rate rose to its highest level in more than five years in May as companies slashed jobs.
But on a brighter note, consumer spending rose for the first time in 16 months, supported by the government's economic stimulus efforts.
The jobless rate climbed to 5.2% in May - a level last seen in September 2003 - up from 5% in April, the internal affairs ministry said.
While hopes are mounting that Japan's economy has come through the worst of its export and production slump, there are concerns that unemployment may rise further as companies seek to recover from heavy financial losses.
The jobless rate, which was slightly worse than expected, is close to a post-World War II high of 5.5%, which was last seen in April 2003.
Many Japanese companies, particularly exporters, have moved swiftly to cut jobs and production in response to a slump in demand caused by the global economic downturn.
Separate figures showed that Japanese household spending edged up 0.3% in May from a year earlier, marking the first increase in 16 months.
The government has announced a series of emergency spending packages to revive Asia's biggest economy, including cash hand-outs for households and incentives to buy fuel-efficient cars. Japan entered recession in the second quarter of 2008 and the economy suffered its worst contraction in the first quarter of 2009 since comparable records began in 1955, shrinking at an annualised pace of 14.2%.
