TOKYO (AFP) - Japan's jobless rate slumped to a 26-year low in May while the jobs-to-applicants ratio hit new record high, as the country struggles with labour shortages, official figures showed Friday (June 29).

The unemployment rate fell to 2.2 per cent from 2.5 per cent in the previous three months, according to a survey by the internal affairs ministry, the lowest level since August-October of 1992.

The jobs-to-applicants ratio stood at its highest rate in 44 years, with 160 job offers going for every 100 job hunters, the labour ministry said in separate data.

Japan has long struggled with a tight labour market, thanks to an ageing society, a perennially low birth rate and very low levels of immigration.

The government has proposed slightly loosening tight restrictions on foreign workers to help ease the problem.

A separate survey by the trade and industry ministry released Friday showed factory output edged down 0.2 per cent in May.

It was the first decline in four months - but the ministry kept the view it has held since January that "industrial production is picking up slowly."

The latest data comes after Japan's economy slid into reverse for the first time in two years at the beginning of 2018, hit by sluggish consumption and a winter cold snap.

The economy contracted by 0.2 per cent quarter-on-quarter in the January-March period, compared with growth of 0.1 per cent at the end of 2017.

That brought to an end a series of eight consecutive quarters of growth, a winning streak not seen since the heady days of the "miracle" boom of the 1980s.