Japanese payrolls posted their seventh straight year-over-year growth in February as hotels and restaurants continued hiring more workers amid a consumption shift to services from goods, while the unemployment rate rose to 2.6 percent from 2.4 percent after improving unexpectedly to a three-year low in January, data released Friday by the Ministry of Internal Affairs and Communications showed.

Compared to the previous month, more people quit their jobs to look for other openings or began looking for work, adding to the upward pressure on unemployment that came from a second straight monthly increase in the number of people who either lost their positions or retired.

The government has resumed its domestic travel discount program on a smaller scale after a brief suspension during the yearend and new year holidays. It lifted most of its Covid border restrictions in October to allow more visitors from overseas, which has been supporting the tourism industry.

There are expectations that economic activity will pick up further in months ahead as the recent spike in new Covid cases appears to have peaked.

The Econoday Consensus Divergence Index stood at plus 10, above zero, which indicates the Japanese economy is performing better than expected after underperforming recently. Excluding the impact of inflation, the index was at plus 21.

Compared to a year earlier, the number of employed rose at a slower pace of 90,000 to an unadjusted 66.67 million in February after surging by an above-trend 430,000 in January and rising 100,000 in December.

The number of unemployed fell just 60,000 on the year to an unadjusted 1.74 million in February, marking the 20th straight month of year-over-year decline after falling at a high pace of 210,000 the previous month. It has drifted down from a pandemic peak of 2.17 million in October 2020 and is just above 1.60 million at the initial phase of the pandemic in early 2020.

Japanese payrolls are expected to post their seventh straight year-over-year growth in February as hotels and restaurants continued hiring more workers in response to further reopening of the economy, while the unemployment rate is seen unchanged at 2.4 percent after improving unexpectedly to a three-year low in January. There is a slight upside risk of the jobless rate edging up to 2.5 percent amid slowing global demand.

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.