| Consensus | Consensus Range | Actual | Previous | |
| Rate | 2.5% | 2.4% to 2.6% | 2.4% | 2.5% |
Highlights
The seasonally adjusted unemployment rate in Japan eased to a 12-month low of 2.4% in July after being steady at 2.5% in the previous three months, reflecting widespread labor shortages. It fell to 2.5% in April from 2.7% in March. The number of those who began job hunting fell 8.2% on the month (-3.9% in June), which means fewer people were counted as being unemployed, while job cuts and retirements also dipped 7.3% (vs. +2.5%) and the number of people who quit for other openings was unchanged (vs. +1.4%).
Japan’s national average unemployment remains well below the rates in other major economies as labor shortages continue in the sectors with long work hours and lower pay, notably daycare, medical, transport and construction. Last year, unemployment was stuck at 2.6% from September to December after rising to the level in August from a five-month low of 2.4% in July.
Payrolls were unchanged on year after rising in the previous five months and marking a rare year-on-year drop in January. There was a pullback in manufacturing after the sector posted a sharp gain in June and its first rise in many months in May. Personal services like laundry and hairdressing marked a large increase in July. Learning support and medical/welfare services continued to hire more than year-earlier levels. In recent months, employment gains have been in both regular and non-regular positions (sharp gains in women and non-regular jobs) after the total number of employed unexpectedly posted its first year-on-year drop in 42 months in January for one-off factors.
The government continues to describe employment conditions as"showing signs of improvement” in its latest monthly economic report for August, unchanged since the last upgrade for the category in June 2023.
Details:
Japan July s/a unemployment rate 2.4% (June 2.5%); median forecast 2.5% (range: 2.4% to 2.6%)
Japan July s/a unemployment rate falls to 1-year low of 2.4%
Japan July employment flat y/y at 68.50 million (June +170,000)
Japan July unemployed flat y/y at 1.69 mln (+20,000 in June at 1.78 mln) after 11 months of rise
Japan July jobless rate eases as fewer people begin job hunting (-8.2% m/m), job cuts/retirements dip (-7.3%), quits for other work flat
July employment flat y/y as hiring rises in entertainment, personal services (incl laundry, hairdressing) while wholesale/retail sector drops
Market Consensus Before Announcement
Japan’s seasonally adjusted unemployment rate is expected to hold near a one-year low of 2.5% for a fourth consecutive month in July, as prolonged labor shortages continue to support a tight labor market.
Labor conditions remained healthy, but there were no signs that the economy was heating up, as labor shortages remained concentrated in sectors such as daycare, healthcare, transportation and construction, which are characterized by long working hours and relatively low wages.
The Cabinet Office’s data showed on August 17 that the country’s seasonally adjusted real GDP posted its third consecutive quarter of expansion, growing 0.3% in the April-June period. Still, the underlying trend of the economy remained unconvincing, with weak signals seen in areas including private consumption and corporate capital expenditure, which fell below expectations.
The number of employed people climbed for a fifth straight month in June, increasing by 170,000 from a year earlier to 68.9 million, with gains seen in the manufacturing, education/cram school and healthcare sectors.
Meanwhile, the number of unemployed people increased by 20,000 to 1.78 million, extending gains for an 11th consecutive month. By reason for unemployment, the number of people who lost their jobs due to circumstances at their employers increased by 30,000, while the number of new job seekers also rose by 30,000. In contrast, the number of people who voluntarily resigned fell by 40,000.
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.