Unemployment in Japan has gone up for the first time in five months, official figures have revealed.

The country's official unemployment rate rose to 5.4% in May from 5.2% in April, erasing hopes that the rate would fall below the psychologically important 5% mark anytime soon - even though industrial output rose for the fourth month in a row in May.

The number of people who had jobs fell 1.8% during the month to 63.56 million people, the second largest monthly fall since records begun in the 1950s.

"The decline in employment was greater than expected," said HSBC Securities Japan chief economist Peter Morgan.

Weak economy

With unemployment in Japan having stayed above 5% for 11 months and companies continuing to cut costs as part of essential restructuring exercises, the latest rise caused concerns about whether the country's export-led recovery could gather steam.

In particular, with fewer people earning money, economists predicted a fall in consumer spending which accounts for 55% of economic activity in Japan.

"Short-term it has a negative impact on consumption," Mr Morgan said.

Demand is weak in Japan and as a consequence prices have fallen for 33 months in a row. In May, consumer prices fell 0.9% while in April they fell 1.1%, according to official figures.

But with industrial output rising at 3.9% in April, its largest monthly increase since records begun in 1993, there were clear signs that the unemployment rate should rise in the long-term.

"When the economy starts recovering properly then people who exited the labour market will return and start seeking jobs, which will actually boost the unemployment rate for the foreseeable future," said Deutsche Securities economist Mikihiro Matsuoka.

"Unemployment is a lagging indicator."