Job availability has improved to its highest level in over four decades, the government said Tuesday, a fresh sign that companies are increasingly competing to hire workers amid the labor shortage.
Despite the tight labor market, wages have been barely growing and private consumption, a key component of the economy, remains sluggish, raising the bar for policymakers to achieve a break with chronic deflation.
The ratio of job offers to job seekers came to 1.48 in April from 1.45 in March, the best level since February 1974, when it stood at 1.53, according to the Health, Labor and Welfare Ministry. This means that 148 positions were available for every 100 people looking for work.
The unemployment rate was unchanged at 2.8 percent in April from the previous month, staying below the 3 percent mark, the Internal Affairs and Communications Ministry said.
Household spending in April, however, fell 1.4 percent from a year ago to ¥295,929, down for the 14th straight month, the longest losing streak since March 2008 to April 2009.
Recent data showed that the economy registered its fifth straight quarter of expansion in the first three months of 2017, the longest growth streak since 2006.
Faced with a graying population, Japan needs to cope with a labor shortage. The government of Prime Minister Shinzo Abe has been seeking to encourage more women to join the workforce and boost productivity through labor reform.
The jobless rate for women fell 0.1 point to 2.6 percent, the lowest level since August 1993, while that for men rose 0.1 point to 2.9 percent in April, according to the internal affairs ministry data.
“New job offers have been on the rise in sectors such as transport and postal services, manufacturing and construction, and the data confirms that the labor market remains tight,” said Miyuki Kiso, market economist at Mizuho Securities Co.
Tight labor market conditions often lead to higher wages, but Kiso struck a cautious note about the outlook as sectors in which labor is in short supply are limited.
Major parcel delivery provider Yamato Holdings Co. said recently it plans to raise shipping fees due largely to a staff shortage.
Japan had 65.22 million workers in April, up a seasonally adjusted 0.4 percent from the previous month, while the number of unemployed people increased 1.1 percent to 1.86 million.
Meanwhile, the average income of salaried households with two or more people slipped 2.2 percent from a year before to ¥472,047.
Economists have pointed out tepid income growth, coupled with worries about the future, has been a drag on consumption.
Spending fell for education, transport and communications services, as well as health and medical services in April.
Consumers continued to cut spending on food items for the ninth consecutive month, a development largely attributed to higher seafood prices due to poor catches.
The adverse impact of rising perishable prices seen late last year, however, has diminished, even as a ministry official acknowledged that consumption “remains weak.”