Companies continued to face a severe labor shortage in September, with job availability remaining at historic highs, government data showed Tuesday.
The job-to-applicant ratio stood at 1.52, unchanged from August, meaning that 152 positions were available for every 100 job seekers. It remained at the highest level since February 1974, the Health, Labor and Welfare Ministry said.
The unemployment rate was unchanged at 2.8 percent, as the Internal Affairs and Communications Ministry maintained its official view that the employment situation is “steadily improving.”
After six straight quarters of growth, the economy remains on a moderate recovery trend. Economists are keeping close tabs on whether wage growth will accelerate and private consumption will gather strength.
Average monthly household spending, a key indicator of private consumption, slipped 0.3 percent in September from a year earlier in real terms to ¥268,802.
“Private consumption is recovering moderately as the employment situation is good and wages have been rising, albeit at a moderate pace,” said Yuichiro Nagai, an economist at Barclays Securities Japan Ltd.
Prime Minister Shinzo Abe has touted the country’s improving labor market as one of the achievements under his Abenomics policy mix that entails bold monetary easing by the Bank of Japan.
The job-to-applicant ratio for regular workers improved further to 1.02 in September, potentially a good sign for future wage growth, according to the labor ministry data. It rose above 1 in June for the first time since officials began compiling comparable data in 2004.
The unemployment rate for men stayed flat at 2.9 percent while that for women was up 0.2 percentage point to 2.7 percent. The number of unemployed people increased 20,000, or a seasonally adjusted 1.1 percent from August, to 1.88 million.
A tight labor market often leads to higher wages as companies seek to secure workers, and economists say more robust wage growth will hold the key to lifting private consumption, which accounts for 60 percent of Japan’s gross domestic product.
Rising for the fourth consecutive month, the average income of salaried households with two or more people came to ¥437,497, up 2.1 percent from a year ago.
Abe, fresh out of a decisive victory in last week’s Lower House election, is now calling for a 3 percent increase in salaries during next spring’s negotiations between management and labor unions.
“Small and mid-sized companies have been raising wages to cope with labor shortages, but not all can do that,” Barclays’s Nagai said.
In September, consumers cut back their spending on durable goods such as air conditioners as demand was apparently cooled by lower temperatures than a year ago. Expenditures on entertainment as well as transport and communications services also fell.
Spending on housing maintenance and food items, particularly meat, gained.
Stronger than expected private consumption gave a lift to Japan’s GDP in the April-June period, offering hopes for growth driven by domestic demand. The Cabinet Office is scheduled to release GDP data for the July-September quarter in mid-November.
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