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Japan’s industrial production rose 2.2% and unemployment rate fell 5.1% in December, signaling a continued recovery, reports Bloomberg, citing Trade Ministry figures.

Bloomberg notes that while the gains in production and jobs may prevent a return to recession, declines in consumer prices and the exchange rate are forcing the government to remain open to further stimulus.

A separate government report showed household spending rose 2.1% in December from a year before, capping a fifth straight advance.

Bloomberg says that in December, 130,000 jobs were created, the biggest increase in four months. Sectors that generated jobs were medical, welfare and education, while there were fewer jobs in the manufacturing and retail industries.

Despite the jump in employment, some companies are still slashing jobs to rein in cost, notes Bloomberg. For instance, Promise Co., Japan’s second-largest consumer lender, says it will cut 1,600 staff, or a third of its workforce, by the end of March 2011. Japan Airlines Corp., which filed for bankruptcy this month, will remove about 15,700 jobs by the end of March 2013.

According to Bloomberg, production was fuelled by exports which rose for the first time in 15 months in December. The rise in exports may also be encouraging companies to increase overtime or hiring.

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