Japan's unemployment rate fell to 3.0 percent in September from 3.1 percent in August, back to where it was in July. This is its lowest level since May 1995. The number of employed persons in September was up 580,000 compared with the same month last year, while the number of unemployed persons has fallen by 230,000 over this period. Japan's participation rate rose from 60.3 in August to 60.5 in September, matching the near 7-year high recorded in July.
Today's data shows that conditions in Japan's labour market remain relatively positive, with the high level of participation in the work force particularly encouraging. Officials at the Bank of Japan have pointed to this improvement as one of the factors supporting their view that inflation will start to rise once the impact of lower oil prices fades. However, despite the increase in employment over the last twelve months there remains little evidence of a significant pick up in wages growth.
The Unemployment Rate measures the number of unemployed as a percentage of the labor force. The unemployment rate is part of the Labour Force Survey which also includes employment data.
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.