JP: Unemployment Rate

Thu Jun 29 18:30:00 CDT 2017

Consensus Actual Previous
Level 2.8% 3.1% 2.8%

Japan's unemployment rate increased to 3.1 percent in May, up from the 2.8 percent rate recorded in each of the three previous months, and also above the consensus forecast of 2.8 percent.

The number of employed persons increased by 760,000 (1.2 percent) on the year in May, while the number of unemployed persons fell by 70,000 (3.2 percent) over this period. Japan's participation rate was 60.8 percent in May, up from 60.1 twelve months earlier.

Today's data shows that Japan's labour market is continuing to generate solid employment growth, broadly consistent with recent comments from the Bank of Japan highlighting improved conditions in the labour market. So far, however, this increase in employment has yet to translate into significant wage growth, with other data released today showing that real household income fell 1.7 percent in the year to May. BoJ Governor Kuroda, noting this slow growth in wages earlier this month, argued that it will take time to change consumers' "deflationary mindset".

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.