More signs yesterday that Japan's economy is not growing as strongly as previously thought.

A day after figures showed retail sales growth slowing more sharply than expected, other data yesterday showed a fall in industrial production last month and a surprise rise in the unemployment rate, while consumer spending fell by more than forecast.

So far the only bits of good economic news have been the still solid rise in exports (even though they slowed from April) and better news on deflation, which still seems to be easing.

Yesterday's figures took the markets by surprise and have started analysts wondering if the economy is dipping, rather than plateauing as export growth continues to drive growth.

Industrial production fell 0.1% in May from April, while the market forecast a flat result.

Production was up 20.2% from May 2009.

The Ministry of Economy, Trade and Industry said its manufacturing survey showed industrial production would grow 0.4% in June and 1.0% in July.

The small fall compares to industry estimates reported last month for a rise of 0.4% in May.

That usually means that demand and orders were not as strong as previously thought.

The Department said industries that mainly contributed to the decrease were: transport equipment, pulp, paper and paper products, petroleum and coal products, in that order.

Commodities that mainly contributed to the decrease are as follows: large passenger cars, semiconductor products machinery, flat-panel display products machinery, in that order.

All commodities were in strong demand in Japan and elsewhere thanks to stimulus spending, which is now falling.

Japan's unemployment rate rose in May to a seasonally adjusted 5.2%, up from 5.1% in April, but not the fall to 5.0% as forecast by the market.

And average household monthly spending in Japan fell 0.7% in price-adjusted terms in May compared to May 2009.

The fall matched April's drop and was well below economists' average forecast for a 0.5% rise.

It was the third monthly rise in unemployment which is now at the highest level since last December.

Stock of unsold products jumped at their fastest rate in five years in May as shipments fell.

The Trade Ministry said inventories rose 2%, the most since August 2004, and shipments slid 1.7%.

The government said the seasonally adjusted number of those people employed in Japan is now at a 20 year low.

But to make matters a bit more confusing, the much watched jobs to vacancy ratio rose to 50 (meaning 10 jobs for every 100 candidates). That's the highest in more than a year, indicating that demand is there for workers.

The Bank of Japan's Tankan business survey is out tomorrow and will tell us if big business is as confident about the outlook as the economists say it is.