| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Rate | 2.5% | 2.5% to 2.7% | 2.6% | 2.6% |
Highlights
Japanese payrolls posted their 10th straight year-over-year growth in May as the reopening of the economy has boosted consumer spending on services while the unemployment rate was unchanged at 2.6 percent as job cuts and quits steadied, data released Friday by the Ministry of Internal Affairs and Communications showed.
Compared to the previous month, the number of people who lost their jobs or retired was unchanged after falling in April and rising in March, while there were fewer people who quit to look for other openings or began looking for work.
The unexpected uptick in the March jobless rate to 2.8 percent from February's 2.6 percent was caused mainly by an increase in the number of people leaving to look for better jobs. Some of those people found work in April, when the rate slipped back to 2.6 percent
The government's domestic travel discount program for residents and widely eased public health rules have been supporting the tourism industry.
The Econoday Consensus Divergence Index stood at plus 11, above zero, which indicates the Japanese economy is performing slightly better than expected. Excluding the impact of inflation, the index was at plus 19.
The seasonally adjusted average unemployment rate stood at 2.6 percent in May, unchanged from April but just above the median economist forecast of 2.5 percent. It is lower than 2.8 percent in March but is still above a three-year low of 2.4 percent hit in January. The jobless rate moved in tight ranges of 2.7 percent to 3.0 percent in 2021 and 2.5 percent to 2.8 percent in 2022.
The latest figure is below the recent high of 3.1 percent reached in October 2020 but is above 2.2 percent recorded in December 2019, just before the pandemic triggered a global economic slump.
In its monthly economic report released last week, the government upgraded its view on employment conditions for the first time in 11 months, saying they are"showing signs of improvement," instead of"picking up."
Japanese workers at large firms are expected to receive an average 3.80 percent increase in total wages, a 30-year high, in fiscal 2023 that began on April 1, up from 2.14 percent in the initial estimate for fiscal 2022. Excluding seniority-based ises that are already in contracts, the average base wage hike is seen lower at 2.33 percent, which is still up from 0.50 percent for the previous year.
The government noted that 50.5 percent of about 2,000 respondents in a survey of small businesses conducted last month by the Japan Chamber of Commerce and Industry plan to raise wages by 3 percent or more in the current fiscal year.
Compared to a year earlier, the number of employed rose 150,000 to an unadjusted 67.45 million in May for the 10th straight increase after rising 140,000 in April, 150,000 in March and 90,000 in February and surging 430,000 in January.
The number of unemployed fell 30,000 on the year to an unadjusted 1.88 million in May for the first drop in three months after rising 20,000 in April and marking its first year-over-year rise in 21 months in March with a 130,000 jump and falling 60,000 in February. It has drifted down from a pandemic peak of 2.17 million in October 2020 but is still above 1.60 million at the beginning of 2020.
The overall employment increase in May from a year earlier was led by a sharp rise in the manufacturing sector for the third straight increase, a rebound in the construction industry, and continued gains in communications as well as the hotels, restaurants and bars category, which has been benefiting from government subsidies for domestic traveling.
Jobs in the medical and welfare category slumped for the third straight month as new Covid cases have decreased. Employment in education support was also down sharply for the second consecutive decrease. Jobs in the wholesale and retail industry showed the first rise in sixth months.
Compared to the previous month, the number of people who lost their jobs or retired was unchanged after falling in April and rising in March, while there were fewer people who quit to look for other openings or began looking for work.
The unexpected uptick in the March jobless rate to 2.8 percent from February's 2.6 percent was caused mainly by an increase in the number of people leaving to look for better jobs. Some of those people found work in April, when the rate slipped back to 2.6 percent
The government's domestic travel discount program for residents and widely eased public health rules have been supporting the tourism industry.
The Econoday Consensus Divergence Index stood at plus 11, above zero, which indicates the Japanese economy is performing slightly better than expected. Excluding the impact of inflation, the index was at plus 19.
The seasonally adjusted average unemployment rate stood at 2.6 percent in May, unchanged from April but just above the median economist forecast of 2.5 percent. It is lower than 2.8 percent in March but is still above a three-year low of 2.4 percent hit in January. The jobless rate moved in tight ranges of 2.7 percent to 3.0 percent in 2021 and 2.5 percent to 2.8 percent in 2022.
The latest figure is below the recent high of 3.1 percent reached in October 2020 but is above 2.2 percent recorded in December 2019, just before the pandemic triggered a global economic slump.
In its monthly economic report released last week, the government upgraded its view on employment conditions for the first time in 11 months, saying they are"showing signs of improvement," instead of"picking up."
Japanese workers at large firms are expected to receive an average 3.80 percent increase in total wages, a 30-year high, in fiscal 2023 that began on April 1, up from 2.14 percent in the initial estimate for fiscal 2022. Excluding seniority-based ises that are already in contracts, the average base wage hike is seen lower at 2.33 percent, which is still up from 0.50 percent for the previous year.
The government noted that 50.5 percent of about 2,000 respondents in a survey of small businesses conducted last month by the Japan Chamber of Commerce and Industry plan to raise wages by 3 percent or more in the current fiscal year.
Compared to a year earlier, the number of employed rose 150,000 to an unadjusted 67.45 million in May for the 10th straight increase after rising 140,000 in April, 150,000 in March and 90,000 in February and surging 430,000 in January.
The number of unemployed fell 30,000 on the year to an unadjusted 1.88 million in May for the first drop in three months after rising 20,000 in April and marking its first year-over-year rise in 21 months in March with a 130,000 jump and falling 60,000 in February. It has drifted down from a pandemic peak of 2.17 million in October 2020 but is still above 1.60 million at the beginning of 2020.
The overall employment increase in May from a year earlier was led by a sharp rise in the manufacturing sector for the third straight increase, a rebound in the construction industry, and continued gains in communications as well as the hotels, restaurants and bars category, which has been benefiting from government subsidies for domestic traveling.
Jobs in the medical and welfare category slumped for the third straight month as new Covid cases have decreased. Employment in education support was also down sharply for the second consecutive decrease. Jobs in the wholesale and retail industry showed the first rise in sixth months.
Market Consensus Before Announcement
Japanese payrolls are expected to post their 10th straight year-over-year growth in May as the reopening of the economy has prompted more active consumer spending on services while the unemployment rate is seen easing slightly to 2.5 percent from 2.6 percent in April and 2.8 percent in March. The number of people who began looking for work increased slightly in April but some of them may have found work in May.
Definition
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.
Description
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.
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.
