Japan’s unemployment rate fell for the first time in two months in June, feeding into optimism that upward pressure on wages may persist and help sustain inflation.
The jobless rate fell to 2.5%, the ministry of internal affairs said Tuesday, the lowest since January. Economists had forecast the reading would hold at 2.6%. The number of workers rose by 190,000 from the previous month, while those without jobs fell by 40,000.
Separate data also suggest that labor demand remains more or less steady, with the jobs-to-applicants ratio nudging one tick lower to 1.30. Economists had forecast a rise to 1.32.
The gauge is a leading indicator for employment trends and shows there were 130 jobs offered in June for every 100 applicants, compared with 131 a month earlier. Job offers rose for lodging, restaurant and education services workers, while those for manufacturing roles fell at a double-digit clip.
Tuesday’s data implies that Japan’s labor market is steadily tightening on the back of a recovery from the pandemic. Consumer confidence is edging higher, and the number of arrivals from overseas recovered last month to more than 2 million, or more than 70% of pre-pandemic levels, according to the Japan National Tourism Organization. That’s spurred demand for workers in the services sector, as reflected in recent surveys including the Bank of Japan’s tankan and the Cabinet Office’s Eco Watchers.
The result may presage further upward pressure on wages. Workers at some Japanese companies recently achieved historic pay gains due in part to a push by the government. Authorities at the BOJ are watching closely to see if workers will be able secure similar wage gains beyond this year.