The jobless rate in July fell to 5.2 percent from 5.3 percent the previous month, dropping for the first time in six months, the government said Friday in a preliminary report.
The number of jobless stood at 3.31 million, down 280,000 from a year before and the second consecutive month it has fallen below year-earlier levels, the Internal Affairs and Communications Ministry said.
The seasonally adjusted figure was lower than the 5.3 percent average projected by economists in a Kyodo News survey.
Job availability also improved in July as the ratio of job offers rose to 0.53 from 0.52 the previous month, according to a separate report released by the Health, Labor and Welfare Ministry.
The figure means 53 jobs were available for every 100 job seekers in July.
In July 2009, the jobless rate hit an all-time high of 5.6 percent. It fell to 4.9 percent in January and stayed there in February before climbing back above 5.0 percent in March.
The number of people with jobs stood at 62.71 million in the reporting month, up 10,000 from a year earlier for the first increase in 30 months.
"We need to look carefully at developments," a ministry official said, calling for caution.
By sector, manufacturing and construction were sluggish. Manufacturing payrolls fell by 100,000 and the construction sector shed 170,000 jobs.