Japan Jobless Rate Drops to 16 Year Low

Japan’s unemployment rate hit a 16-year low in May, suggesting the economy will rebound in the third quarter from a sales tax hike and consequent slump in consumer spending.

The jobless rate in the world’s third-largest economy fell to 3.5 percent, the lowest since 1997 and a level the Bank of Japan says is near full employment.

At the same time, the availability of jobs rose to its highest level since 1992, good news for Prime Minister Shinzo Abe as he tries to cement a recovery after two decades of stagnation.

The strong employment numbers were published alongside other data on Friday showing Japan’s household spending fell 8 percent in the year to May, four times the drop projected in a median market forecast and more than the 4.6 percent decline in April.

The tumble was due mainly to a pull-back in spending on housing, cars and household appliances – all of which saw a surge in demand before the sales tax hike on April 1.

“An (economic) contraction in the second quarter is a certainty, but the job market improvements are positive for the economy,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

via Reuters

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza