Japan's jobless rate rose unexpectedly last month, reinforcing expectations the Bank of Japan will delay its next rate rise, although household spending jumped more than forecast.
Japan's seasonally adjusted unemployment rate rose to 4.0 percent in September from 3.8 percent in August and a nine-year low of 3.6 percent in July. Economists had expected the unemployment rate to stay flat at 3.8 percent.
The readings, coming a day before the Bank of Japan's next rate review and an economic outlook report, supported expectations that the BOJ will wait until early next year to raise rates.
Finance Minister Fukushiro Nukaga said the jobless numbers showed job conditions were somewhat weak, and analysts said this should concern the central bank.
"The job figures aren't good news for the Bank of Japan as they cast doubt on its scenario that economic slack will slowly disappear and push up prices," said Hiroshi Shiraishi, an economist at Lehman Brothers.
While a rise in unemployment may be partly due to more young people looking for work, some economists said the improvement in job conditions seen in recent months may be stalling.
The jobs-to-applicants ratio, which measures the number of job offers available per job seeker, nudged down to 1.05 in September from 1.06 in August.
Financial markets showed a limited reaction to the data, which follows a stream of soft economic figures for Japan.
Analysts were more upbeat about the household spending for September -- which rose 3.2 percent from a year earlier, more than double the 1.3 percent rise expected by analysts.
While a government official said special factors pushed up this figure and the underlying trend was closer to around 1.7 percent growth, analysts said the key consumption figure should ensure Japan avoids a second quarter of economic contraction.
"The economy is likely to post modest growth in July-September from a contraction in April-June, and that's a plus for BOJ policy," said Takumi Tsunoda, an economist at Shinkin Central Bank Research Institute.
"But the BOJ has no choice but to act cautiously due to uncertainty over developments in subprime woes and the outlook for the U.S. economy. It will be difficult to raise rates this year."
Troubles in the U.S. housing sector and a subsequent market shakeout around the world since August have raised concerns that Japan's export-led economic expansion could sputter into recession.
Japanese exports to the United States in September fell from a year earlier at the fastest pace in four years. The United States has long been Japan's biggest export market, but China including Hong Kong is likely to take over that spot this year.
The BOJ is seen cutting its growth and inflation forecasts and stressing downside risks more in its twice-yearly report due at 3 p.m (0600 GMT) on Wednesday.
"The main focus is on how the central bank views risks from the global economy," Tsunoda said.
Expectations on when the BOJ will raise rates have been pushed back further in recent days. There appears to be less than a 20 percent chance of a rate hike this year and just over a 50 percent chance by March, according to swap contracts on the overnight call rate.
But the BOJ will likely reinforce its message that it wants to eventually raise interest rates to more normal levels as consumer prices start rising on the back of economic growth.
The bank has also said tight job conditions should eventually push up wages, boosting inflationary pressure.
But that is hard to see from Tuesday's data.
"It doesn't look like job markets are tightening," said Hideo Kumano, economist at Dai-ichi Life Research Institute.