JP: Unemployment Rate

Mon Jan 29 17:30:00 CST 2018

Consensus Actual Previous
Level 2.7% 2.8% 2.7%

Japan's seasonally-adjusted unemployment rate rose from 2.7 percent in November to 2.8 percent in December, just above the consensus forecast of 2.7 percent. The official unemployment rate in November was the lowest seen since November 1993.

The number of employed persons increased by 520,000 (0.8 percent) on the year in December, while the number of unemployed persons fell by 190,000 (9.8 percent) over this period. Japan's participation rate was 60.5 percent in December, up from 60.1 twelve months earlier.

Despite the small increase in the unemployment rate, today's data remain consistent with the Bank of Japan's assessment that labour market conditions are tightening. Officials expect this will eventually translate into stronger wages growth and help push inflation towards its 2.0 percent target. Other data, however, suggest that this will continue to be a gradual process, with household spending data also released today showing real household income rose just 0.4 percent on the year in December while CPI data released last week showed no change in underlying measures of inflation.

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.