Japan’s unemployment rate fell to 2.8 percent in February, the lowest in more than 22 years, offering a positive sign for the country’s economy, government data showed Friday.
Consumers, however, remained reluctant to loosen their purse strings, as household spending, a key indicator of private consumption, slipped 3.8 percent in the month from a year earlier to ¥260,644 ($2,300), the internal affairs ministry said.
The February jobless rate fell slightly from 3.0 percent in January.
The country’s job availability, or the ratio of job offers to seekers, remained unchanged from January at 1.43, the best level since July 1991, according to labor ministry data. It means that 143 positions were available for every 100 applicants.
The employment figures come as the economy continues to recover moderately while domestic demand remains lackluster. The government has been encouraging companies to boost wages and spur consumer spending.
The jobs market remains tight, with labor shortages prevalent in the nonmanufacturing sector such as medical and nursing care. The last time the employment rate stood at 2.8 percent was June 1994.
“The number of jobless people has been falling drastically, while there are more employed people, meaning that many have successfully landed jobs,” a ministry official said. “The labor market situation has been steadily improving.”
The number of unemployed declined a seasonally adjusted 4.0 percent, dropping by 80,000 to 1.90 million, while the total 64.83 million workers nationwide reflect a decrease of 0.3 percent.
Joblessness for men fell 0.1 point to 3.0 percent and remained unchanged for women at 2.7 percent, the Ministry of Internal Affairs and Communications said.
Compared with a year ago, construction, information and technology, wholesale and retail sectors added more jobs, while the health care and nursing care sector reported a decline.
“As exports and production have been recovering recently, this may have filtered into the labor market by increasing the number of workers,” said Miyuki Kiso, market economist at Mizuho Securities Co.
But Kiso struck a cautious note as domestic demand remains weak, pointing to risks for the export-reliant economy, including Britain’s negotiations to exit the European Union and unpredictable U.S. economic policies with President Donald Trump at the helm.
Labor reform and wage growth are both key to bolstering the world’s third-largest economy, in the view of Prime Minister Shinzo Abe’s administration, which has worked to curtail excessive overtime and ensure equitable treatment for regular and nonregular workers.
Household income rose 0.7 percent in February from a year earlier to ¥484,038, marking the fourth straight monthly gain.
Sluggish consumer spending has been a headache for policymakers, who are still trying to figure out why consumers are more willing to save than spend.
The 12th straight monthly drop in household spending came as February had one less day than a year ago due to the leap year and saw unfavorable weather conditions that apparently hurt consumer sentiment.
Consumers cut spending on food items, clothes, transportation and communications, and entertainment. Expenditure on housing and education increased.