Japan’s Unemployment Rate Falls to 3.5% in August

Japan’s unemployment rate dropped to 3.5 percent in August from 3.8 percent the previous month, marking the first improvement in three months, government data showed Tuesday, but the reduction was not necessarily a positive sign for the nation’s economy, according to an official.

Behind the fall in the rate is that unemployed women stopped looking for a job, the official at the Ministry of Internal Affairs and Communications said, indicating they have given up entering the workforce with the April 1 consumption tax hike hurting the economy.

The number of people who newly began seeking work fell a seasonally adjusted 120,000 to 660,000, the ministry said, adding the unemployment rate for women slid 0.5 percentage point to 3.2 percent while that for men was flat at 3.8 percent.

The jobless rate is the percentage of people who are unemployed but trying to find work. As those not seeking a job are not counted in Japan as unemployed, an increase in the number of people who have given up looking for work helps push the unemployment rate down.

The number of unemployed people decreased 180,000 to 2.30 million, but that of employed people increased only 70,000 to 56.06 million, the ministry said.

Separate data released by the Ministry of Health, Labor and Welfare showed the country’s job availability was flat from July. The ratio of employment offers to seekers stayed at 1.10 in August, which means 110 positions were available for every 100 job seekers.

The wholesale and retail industry and consumer-related services such as entertainment cut jobs from a year earlier, though the construction sector and the medical and welfare segment increased jobs, the internal affairs ministry said.

Japan’s job market may worsen ahead as the world’s third-biggest economy has been stalling in the wake of the 3-point consumption tax hike to 8 percent, possibly making companies more reluctant to boost employment, analysts said.

“Domestic demand is clearly sluggish and the economic outlook is uncertain. The labor market is unlikely to improve,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.

“The unemployment rate is expected to rise to 4 percent” by the end of this fiscal year through March 2015, he added.

The Japanese economy plummeted an annualized real 7.1 percent in the three months through June, suffering its worst setback since the first quarter of 2009 when it fell an annualized 15.0 percent following the 2008 global financial crisis.

Some experts forecast that the nation’s economy may not recover in the July-September period at a pace that can offset the plunge in the previous quarter.

via Mainichi

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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