| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Rate | 2.5% | 2.4% to 2.6% | 2.7% | 2.5% |
Highlights
Japanese payrolls posted their 12th straight growth on year in July as hospitals, hotels, restaurants, factories and construction firms continued to fill job vacancies as the economy continues reopening while the unemployment rate unexpectedly climbed to 2.7 percent from 2.5 percent in June as job cuts rose and more people began looking for work, data released Tuesday by the Ministry of Internal Affairs and Communications showed.
The government's domestic travel discount program for residents and widely eased public health rules have been supporting the tourism industry and some retail stores.
Compared to the previous month, the number of people who lost their jobs or retired rose after being unchanged for two months while more people began looking for work after two months of decline and the number of those who quit to look for other openings marked the first rise in four months.
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 positions. Some of those people found work in April, when the rate slipped back to 2.6 percent.
The Econoday Consensus Divergence Index stood at minus 12, below zero, which indicates the Japanese economy is performing slightly worse than expected after outperforming recently. Excluding the impact of inflation, the index was at minus 18.
The seasonally adjusted average unemployment rate stood at 2.7 percent in July, up from 2.5 percent in June, when it improved from 2.6 percent in May. It was higher than the median economist forecast of 2.5 percent. It is below 2.8 percent in March but is still slightly 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 for August released on Monday, the government maintained its overall assessment, saying the economy is recovering moderately as substantial wage hikes and Covid-era excess savings are supporting consumer spending while improving supply chains are shoring up business confidence and investment. It also maintained its view on employment conditions after upgrading it for the first time in 11 months in June, saying they are"showing signs of improvement."
Regular wages among full-time workers have been rising steadily in the current fiscal year that began in April and are expected to rise further as more firms will reflect the results of spring labor-management negotiations. Summer bonuses are up further after a sharp gain last year and firms are raising hourly wages to secure workers.
Compared to a year earlier, the number of employed rose 170,000 to an unadjusted 67.72 million in July for the 12th straight increase after rising 260,000 in June, 150,000 in May, 140,000 in April, 150,000 in March and 90,000 in February and surging 430,000 in January.
The number of unemployed rose 70,000 on the year to an unadjusted 1.83 million in July for the first rise in three months after falling 70,000 in June and 30,000 in May, rising 20,000 in April, and marking its first year-over-year rise in 21 months in March with a 130,000 jump. 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 July from a year earlier was led by a sharp rise in the medical and welfare category, which rebounded in June after falling in the previous four months. It was also due to continued solid gains in the manufacturing sector and the construction industry as well as the hotels, restaurants and bars category, which has been benefiting from government subsidies for domestic traveling, pent-up domestic demand and a fast-recovering inflow of foreign visitors.
Employment in the wholesale and retail industry accelerated while sharp drops were seen in the financial sector, transportation and telecommunications.
The government's domestic travel discount program for residents and widely eased public health rules have been supporting the tourism industry and some retail stores.
Compared to the previous month, the number of people who lost their jobs or retired rose after being unchanged for two months while more people began looking for work after two months of decline and the number of those who quit to look for other openings marked the first rise in four months.
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 positions. Some of those people found work in April, when the rate slipped back to 2.6 percent.
The Econoday Consensus Divergence Index stood at minus 12, below zero, which indicates the Japanese economy is performing slightly worse than expected after outperforming recently. Excluding the impact of inflation, the index was at minus 18.
The seasonally adjusted average unemployment rate stood at 2.7 percent in July, up from 2.5 percent in June, when it improved from 2.6 percent in May. It was higher than the median economist forecast of 2.5 percent. It is below 2.8 percent in March but is still slightly 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 for August released on Monday, the government maintained its overall assessment, saying the economy is recovering moderately as substantial wage hikes and Covid-era excess savings are supporting consumer spending while improving supply chains are shoring up business confidence and investment. It also maintained its view on employment conditions after upgrading it for the first time in 11 months in June, saying they are"showing signs of improvement."
Regular wages among full-time workers have been rising steadily in the current fiscal year that began in April and are expected to rise further as more firms will reflect the results of spring labor-management negotiations. Summer bonuses are up further after a sharp gain last year and firms are raising hourly wages to secure workers.
Compared to a year earlier, the number of employed rose 170,000 to an unadjusted 67.72 million in July for the 12th straight increase after rising 260,000 in June, 150,000 in May, 140,000 in April, 150,000 in March and 90,000 in February and surging 430,000 in January.
The number of unemployed rose 70,000 on the year to an unadjusted 1.83 million in July for the first rise in three months after falling 70,000 in June and 30,000 in May, rising 20,000 in April, and marking its first year-over-year rise in 21 months in March with a 130,000 jump. 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 July from a year earlier was led by a sharp rise in the medical and welfare category, which rebounded in June after falling in the previous four months. It was also due to continued solid gains in the manufacturing sector and the construction industry as well as the hotels, restaurants and bars category, which has been benefiting from government subsidies for domestic traveling, pent-up domestic demand and a fast-recovering inflow of foreign visitors.
Employment in the wholesale and retail industry accelerated while sharp drops were seen in the financial sector, transportation and telecommunications.
Market Consensus Before Announcement
Japanese payrolls are expected to have posted their 12th straight year-over-year growth in July as hotels, restaurants, factories and construction firms continued to fill job vacancies amid slower but resilient consumer spending while the unemployment is forecast at 2.5 percent, unchanged from June, when it improved from 2.6 percent in May. The government's domestic travel discount program for residents and widely eased public health rules have been supporting the tourism industry and some retail stores.
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.
