Tokyo: Japan’s unemployment rate jumped unexpectedly for a second straight month in September, according to a report released by the government. This has raised concerns about the outlook for the labour market which is a key pillar of the economy.
The rise to 4% defied market forecasts for the jobless rate to hold steady at 3.8% after August’s rise from a nine-year low of 3.6% seen in July.
Japan’s economy has been steadily recovering from recession in the 1990s although there are concerns about the impact of slowing U.S growth.
Signs of a weakening labour market will make it even harder for the central bank to justify another interest rate rise any time soon, analysts said.
The rise in the jobless rate prompted the government to revise its assessment of the labour market for the first time in over two years as small and mid-sized companies in particularly hire fewer new workers.
“The number of fresh job offers on a real term basis by small- and mid-sized companies has declined in the past nine consecutive months,” noted a labour ministry official.
Japan’s strong labour market has been a key driver of the country’s economic recovery from a slump stretching back over a decade. But the latest rise in the unemployment rate prompted renewed concerns that the job market is losing strength.
“The job market is showing signs of a downturn, especially among small- and mid-sized companies,” said Credit Suisse economist Satoru Ogasawara.
Economic and Fiscal Policy Minister Hiroko Ota, however, played down worries about the outlook for the world’s second largest economy.
“The improvement in the job market has slowed slightly, but production is picking up. We don’t neet to worry about (the jobs data) that much,” she said.
Although the jobless rate rose, the number of people unemployed in September dropped 110,000 from a year earlier to 2.69 million.
Spending by Japanese households in September meanwhile rose 3.2% from a year earlier, the government said. Strong company earnings also continue to support the overall recovery, with Japan’s total corporate income hitting $506 billion in the year to June, the highest since 1990, the National Tax Agency said.
But analysts voiced concern that a weaker labour market might dampen consumer spending. “If the jobless rate keeps rising to the extent that it starts to put downward pressure on wages, household spending may also take a hit,” said Mitsuru Saito, the chief economist of Tokai Tokyo Securities.
The ratio of job offers to job seekers fell to 1.05 in September from 1.06, meaning that there were 105 jobs available for every 100 job seekers. The number of full-time job offers fell in September to 62 for every 100 job seekers, down from 64 reported a year earlier, the ministry said, amid concerns that companies are seeking to use more part-time workers to cut costs.