Japan's jobless rate held steady at an 18-year low for the second-straight month in May. The unemployment rate was 3.3 percent, slightly from expectations of 3.4 percent and steady from April. This is the lowest jobless rate since April 1997. Employment increased 20,000 from a year ago after adding 40,000 jobs in April.
The job-to-applicants ratio inched higher to 1.19, from 1.17 the previous month against expectations of 1.17.
A tighter labour market should help workers demand higher wages and create a virtuous circle for inflation to rise. That is what the BoJ is hoping for.
The unemployment rate measures the number of unemployed as a percentage of the labor force.
The unemployment rate and employment change are carefully monitored. The employment data show the number employment along with the change in employment for the previous year. Monthly changes in employment also help clarify whether businesses are hiring. The unemployment rate is the percentage of the labor force that is unemployed. A lower jobless rate translates into more income earning workers and greater consumption. Increased spending is a positive for consumer oriented economic growth, something that has lagged in Japan.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events.
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