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The jobless rate rose to 4.1 percent, the highest level in nearly two years. At the same time, household spending fell 1.8 percent, the fourth monthly drop, Bloomberg news reported. And retail sales fell 3.3 percent in June vs. June 2007 when adjusted for inflation.
Japan's export market has also taken a hit as consumer spending slows in other parts of the world. Exports, which helped lead Japan out of a recession in 2002, fell last month for the first time in more than four years.
Those recent reports lead economists to believe Japan's economy contracted in the second quarter.
``Japan is on the verge of a recession,' Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo, told Bloomberg. ``Consumer spending may not remain strong enough to prop up the economy.'
The Bank of Japan, responsible for the country's monetary policy, said the economy is slowing further because of weak business investment and consumer spending.
Elsewhere in the Asia/Pacific region, Australia retail sales unexpectedly fell 1 percent in June.
For the second quarter, retail sales dropped 0.6 percent after falling 0.3 percent in the first quarter.
This is the first back-to-back, quarterly decline in retail sales since 1996, according Westpac Institutional Bank.
In the second quarter, the sharpest decline in retail sales came from the department store, clothing, and hospitality and services sectors.
For the third quarter, Westpac expects retail sales to get a boost from tax cuts and an easing of fuel prices. However, the bank predicts consumer spending to be weak into the second half of 2008 and well into 2009.