Overall, data released on Friday did little to bolster the case for an economic upturn, sparking a fall on Tokyo stock market of more than one per cent even as the yen eased against the dollar following record-breaking third-quarter US growth of 7.2 per cent on an annualized basis.

The number of people out of work totalled 3.46 million, down 190,000 from a year earlier, but the number of employed also declined for the second consecutive month to 63.46 million, down 70,000.

At the same time, the number of employers fell for a second month in a row to 53.28 million, down 140,000 from a year earlier, the Ministry of Public Management, Home Affairs, Posts and Telecommunications said.

"Since the number of both workers and employers declined, we do not believe the job situation is improving," said a ministry official.

Employment data are considered lagging indicators, which means they tend to show improvements only about six months after the economy actually recovers.

"The jobless rate for men rose again as companies in the construction and manufacturing sectors continued to trim their workforces through restructuring and encouraging early retirement," the official noted.

The jobless rate for men rose to 5.5 per cent in September from 5.3 per cent in August while that for women fell to 4.7 per cent from 4.8 per cent.

The number of employees in the construction business dropped 290,000 from a year earlier to 5.92 million in September, with the manufacturing sector down 70,000 to 11.76 million.

"The construction sector has long been saddled with excess workers and many companies continued to shed them," said Shunichi Maruyama, senior economist at UFJ Institute Ltd.

"For the manufacturing sector, jobs are being eliminated as more Japanese companies are moving their production bases to China" to take advantage of cheaper labor costs, Maruyama said.

"Overall, the economy is not yet strong enough for corporate managers to boost hiring," the economist said.