Average unemployment fell for the third year in a row in 2005

The jobless rate fell to 4.4% in December, from 4.6% the previous month, as the total number of unemployed dropped by 50,000 to 2.6 million.

Seasonally adjusted unemployment averaged 4.4% last year, significantly lower than the 4.7% recorded in 2004.

Rising consumer spending and industrial output have boosted Japan's economy.

'Revitalised'

After a decade of low growth and intermittent recessions, economists believe Japan's economic fortunes are finally improving.

The improvement in the unemployment rate confirmed that the Japanese economy is heading towards a steady recovery Tatuysa Torikoshi, Daiwa Institute of Research

The steady improvement in the labour market was illustrated by the fact that average unemployment fell for the third consecutive year.

The number of vacancies compared with the number of people looking for work has also risen to its highest level since 1992.

"The improvement in the unemployment rate confirmed that the Japanese economy is heading towards a steady recovery, albeit at moderate pace," Tatsuya Torikoshi, senior economist at the Daiwa Institute of Research, told Agence France Presse.