Japan PM says economy has not yet turned around

TOKYO (Reuters) - Prime Minister Yukio Hatoyama said he does not think the Japanese economy has turned around despite a fall in unemployment, suggesting he may consider measures to support the economy as Japan's jobless rate remains near a record high.

Some ministers in Hatoyama's cabinet have suggested the new government, which took office less than a month ago, may need to take steps to deal with worsening job conditions.

More than 60 percent of lawmakers from Hatoyama's Democratic Party anticipate that additional stimulus measures will be required this autumn because domestic economic activity could stall, a Kyodo news survey showed, based on responses from 210 of the DPJ's 308 lower-house lawmakers.

"The jobless rate has dropped temporarily, but I don't think the economy has turned around. I think job market conditions could get worse towards the end of the year," Hatoyama told reporters.

The jobless rate fell unexpectedly to 5.5 percent in August from a record high 5.7 percent in July, but economists said it was unclear if the positive move could be sustained as the effect of government stimulus spending fades.

Japan's unemployment rate has soared in the past year as the country's manufacturers slashed jobs to cope with a slide in their exports.

Hatoyama also said he could not say how much wasteful spending his government had located in the extra budget for the year to March compiled by his predecessor Taro Aso, adding that more efforts to slash wasteful spending are needed.

The more the government can save, the less government bonds it would need to issue to pay for its own policies.

Hatoyama's Democratic Party, which ousted the long-running Liberal Democratic Party in an Aug. 30 election, has said it would stop what it thinks is wasteful spending in the 14 trillion yen ($156 billion) supplementary budget Aso has compiled to stimulate the economy.