Japan's unemployment rate at its lowest in 25 years

Japanese college students publicly declaring they would do their best to find work during a job-hunting pep rally held to boost their morale, at an outdoor theatre in Tokyo.
Japanese college students publicly declaring they would do their best to find work during a job-hunting pep rally held to boost their morale, at an outdoor theatre in Tokyo.PHOTO: REUTERS

TOKYO • Japan's unemployment rate hit a 25-year low in January and job availability stayed at a two-decade high, government data showed yesterday, offering policymakers hope that a strengthening economic recovery will nudge firms into raising wages.

Separate data showed core consumer inflation in Tokyo, a leading indicator of nationwide price trends, accelerated to 0.9 per cent in February from 0.7 per cent in the previous month.

While inflation remains distant from the Bank of Japan's 2 per cent target, yesterday's batch of data underscore the central bank's view that brightening economic prospects and a tight job market will prompt firms to push up prices.

The seasonally adjusted unemployment rate fell to 2.4 per cent in January, down from 2.7 per cent in December and lower than a median market forecast of 2.7 per cent, Internal Affairs ministry data showed. That was the highest level since April 1993, when Japan's economy was still in an asset price bubble.

"We're seeing a pretty big increase in jobs in markets that are expanding. It's in line with Japan's expanding economy," said Societe General Securities chief economist Takuji Aida. "The jobless rate is likely to stabilise below 2.5 per cent and underscore the view Japan is heading towards a sustained exit from deflation."

The jobs-to-applicants ratio was 1.59, unchanged from the previous month and matching the highest since January 1974. The median forecast was for the index to rise to 1.60. The pick-up in Tokyo consumer inflation was driven by rises in hotel and package tour prices, reflecting robust demand from Chinese visitors to the city and Japanese tours to South Korea during the winter Olympic Games, the data showed.

Japan's economy expanded at an annualised 0.5 per cent in October-December, posting its longest continuous expansion since the 1980s boom, thanks to robust capital spending.

But inflation remains distant from the BOJ's 2 per cent target as companies hold off on raising prices and wages, citing uncertainty over the economic outlook.

Japanese Prime Minister Shinzo Abe has been pushing companies to raise wages by 3 per cent or more to spur consumer spending, piling pressure on firms to spend their some their huge hoards of cash to broaden the benefits of the strengthening economy.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 03, 2018, with the headline 'Japan's unemployment rate at its lowest in 25 years'. Print Edition | Subscribe