JP: Unemployment Rate

Thu Jul 27 18:30:00 CDT 2017

Consensus Actual Previous
Level 3.0% 2.8% 3.1%

Japan's unemployment rate fell from 3.1 percent in May to 2.8 percent in June below the consensus forecasts of 3.0 percent. This matches the level recorded in the three months prior to May and is the lowest official unemployment rate Japan has seen since the mid-1990s.

The number of employed persons increased by 610,000 (0.9 percent) on the year in June, while the number of unemployed persons fell by 180,000 (8.6 percent) over this period. Japan's participation rate was 61.0 percent in May, up from 60.5 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. Household spending data also released today showed real household income rose just 0.1 percent on the year in June, while CPI data confirmed that consumer price pressures remain subdued.

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.