Nationwide job availability improved in May to the best in about 22 years as the unemployment rate fell to 3.5 percent, the lowest in more than 16 years, the government said Friday.
As companies became more willing to hire workers amid an uptick in the economy and a labor shortage, the ratio of job offers to job-seekers climbed for the 18th month straight, hitting 1.09 in May compared with 1.08 in April.
This means 109 positions were available for every 100 job- seekers, the Health, Labor and Welfare Ministry said.
It was the highest since the 1.10 logged in June 1992, soon after the asset-inflated bubble economy imploded.
The jobless rate, meanwhile, dwindled to 3.5 percent in May from 3.6 percent the previous month, a level not seen since December 1997, the Internal Affairs and Communications Ministry said in a preliminary report.
The number of unemployed people fell by a seasonally adjusted 1.3 percent to 2.33 million, as those involuntarily quitting their jobs slid 6.6 percent to 710,000, the ministry said, adding that the number of people with jobs rose 0.6 percent to 63.58 million.
Japan’s job market “has continued to pick up as firms become eager to boost employment” amid a worker shortage in certain industries, a ministry official said.
Takeshi Minami, chief economist at Norinchukin Research Institute, concurred.
“The construction, restaurant and service sectors in particular have faced a labor shortage” after the economy was jolted by Prime Minister Shinzo Abe’s deflation-busting “Abenomics” plan.
But Minami said the pace of improvement in unemployment might slow because the consumption tax hike on April 1, the first tax hike in 17 years, is expected to cool demand and make the corporate sector reluctant to expand.
“It is uncertain whether the labor market will remain healthy, given that some economic indicators suggest the 3-point tax increase has dragged down private spending,” Minami said.
By industry, the health care and welfare sector and the wholesale and retail sector added 430,000 and 110,000 jobs in May, respectively, from a year ago, but the agriculture and forestry industry cut 110,000 jobs, the ministry said.
The economy grew for the sixth consecutive quarter through the first quarter of the year, due mainly to the three-pronged Abenomics stimulus, which consists of aggressive quantitative and qualitative easing by the Bank of Japan, massive fiscal spending, and structural reforms that have yet to materialize.
But fears linger that the first stage of the tax hike, aimed at covering swelling social security costs as the population rapidly grays, could stifle consumer spending, which accounts for around 60 percent of gross domestic product. The second stage, due in 2015, will complete the levy’s doubling to 10 percent.
Average monthly household spending for May dropped an inflation-adjusted 8.0 percent from the same month last year, after a 4.6 percent drop in April, separate data released by the government said Friday.