Japan's already low unemployment rate just got whole lot lower

YOSHIKAZU TSUNO/AFP/Getty Images
  • Japan’s unemployment rate tumbled to the lowest level since 1993 in January
  • There are currently 159 jobs available for every 100 Japanese job seekers
  • Despite worker shortages and stronger economic conditions, real wage growth is going backwards

Japan’s already low unemployment rate just got whole lot lower.

According to data released today, unemployment tumbled to just 2.4% in January, well below the 2.8% level of December and expectations for a smaller decline to 2.7%.

It now sits at the lowest level since April 1993.

Here, look.

Helping to explain why unemployment is so low, there’s also a scarcity of Japanese workers with the jobs-to-applicants ratio — simply measuring the number of jobs on offer to those seeking work — holding at 1.59 in January, the highest level since January 1974.

Put another way, for every 100 job seekers right now, there are 159 positions available.

However, despite labour market conditions being ultra-tight and stronger economic conditions in Japan, that has yet to translate to any meaningful wage pressures.

According to Reuters, citing data from Japan’s labour ministry, real worker wages — adjusted for inflation — tumbled by 0.5% in the year to December, reversing a 0.1% percent annual increase reported in November.

It was the annual biggest decline since July 2017.

Over the entire year, and despite stronger economic and labour market conditions, real wages fell by 0.2% following a 0.7% increase in 2016.

In nominal terms, they rose by 0.7% in the 12 months to December, below the 0.9% increase in inflation.

Weak wage growth continues to thwart the Bank of Japan’s attempts to lift underlying inflation back to its 2% target.

It has promised to persist with ultra-easy monetary policy settings until inflation moves back above this level.

Based on current inflation and wage trends, it’s debatable as to whether that goal will be achieved anytime soon.

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