JP: Unemployment Rate

Thu Mar 01 17:30:00 CST 2018

Consensus Actual Previous
Level 2.7% 2.4% 2.8%

Japan's seasonally-adjusted unemployment rate fell from 2.8 percent in December to 2.4 percent in January, below the consensus forecast of 2.7 percent. This is the lowest unemployment rate since April 1993.

The number of employed persons increased by 920,000 (1.4 percent) on the year in January, well up from an increase of 520,000 (0.8 percent) in December, while the number of unemployed persons fell by 380,000 (19.3 percent) on the year after dropping 190,000 (9.8 percent) previously. Japan's participation rate was at 60.5 percent in January, unchanged from December but up from 60.0 twelve months earlier.

Today's data shows the recent improvement in Japanese labour market conditions has extended into the new year, broadly in line with the expectations of officials at the Bank of Japan. Officials expect this will eventually translate into stronger wages growth and help push inflation towards its 2.0 percent target, though BoJ Governor Haruhiko Kuroda this week repeated his view that this will take some time. Household spending data scheduled for release next week will include update information on growth in real household income, which rose by just 0.4 percent in December.

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.