TOKYO - JAPAN'S unemployment rate hit a three-year high of 4.4 per cent in February, the government said on Tuesday, as the deepening recession tightened its grip on Asia's largest economy.

Consumer spending meanwhile fell 3.5 per cent month-to-month in the latest set of gloomy figures for an economic powerhouse on course for its worst recession since World War II.

'There is no good news in those data,' said JP Morgan senior economist Masamichi Adachi.

Japan's heavily export-dependent economy shrank at an annualised pace of 12.1 per cent in the last quarter of 2008, as the downturn has dried up demand for its cars, high-tech goods and other popular exports. Major manufacturers have cut back on production and slashed tens of thousands of jobs since the crisis began. Exports in February dropped nearly 50 per cent year-on-year.

'The employment data is likely to continue worsening for the next three to six months,' said Hiroshi Watanabe, an economist at Daiwa Research Institute, a private think-tank.

The government said there were only 59 available jobs for every 100 job-seekers while unemployment rose to 4.4 per cent from 4.1 per cent the previous month - matching a high last seen in January 2006.

'We recognise that the current (employment) situation remains severe,' said government spokesman Takeo Kawamura. 'There is a need for additional measures' to create new jobs, he said.

To revive Asia's biggest economy, Prime Minister Taro Aso was set to outline plans for a new stimulus package - Japan's fourth since October - before he leaves for the Group of 20 summit in London Thursday.

The extra spending is reportedly expected to be worth more than 10 trillion yen (S$155 billion) and aims to help meet the goal of creating two million new jobs over the next three years.

The global slowdown has left few economies unscathed, but Japan has been hit especially hard. The International Monetary Fund (IMF) says the economy will shrink by 5.8 per cent this year, far worse than expected in Europe and the US. -- AFP