JP: Unemployment Rate

Thu Jun 28 18:30:00 CDT 2018

Consensus Actual Previous
Level 2.5% 2.2% 2.5%

Japan's seasonally-adjusted unemployment rate fell from 2.5 percent in April to 2.2 percent in May, well below the consensus forecast of 2.5 percent. This is the lowest unemployment rate since 1992 and suggests that firms may need to boost wages, consistent with officials' forecasts that price pressures are set to strengthen.

The number of employed persons in Japan increased by 1.51 million (2.3 percent) on the year in May, slowing from an increase of 1.71 million (2.6 percent) in April, while the number of unemployed persons fell very sharply by 520,000 (24.8 percent) on the year after dropping 170,000 (8.6 percent) previously. Japan's participation rate was at 61.7 percent in May, unchanged from April and up from 60.8 twelve months earlier.

Today's data continues to show very positive conditions in the Japanese labour market, with strong employment growth helping to boost participation and sending unemployment to new multi-decade lows. Recent gains in the participation rate have taken it to its highest levels since the mid-2000s, with much of this driven by female workers. Officials at the Bank of Japan expect employment gains will eventually translate into stronger wages growth and help push inflation towards its 2.0 percent target. Household spending data scheduled for release next week will include updated information on growth in real household income.

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.