Japan June Jobless Rate Edges Down to 2.5%, 1st Drop in 5 Months as Number of New Job Seekers Slumps

–Employment Marks 23rd Straight Y/Y Rise, Led by Surge in Wholesale/Retail; Manufacturing Jobs Post 4th Drop in a Row
–Number of Unemployed Up Y/Y for 3rd Straight Month

By Max Sato

(MaceNews) – Japanese payrolls posted the 23rd straight rise on year in June, led by a surge in the wholesale and retail industry which offset fewer transport and manufacturing jobs, while the unemployment rate inched down to 2.5% from 2.6%, marking the first improvement in five months as fewer people began looking for work, data released Tuesday by the Ministry of Internal Affairs and Communications showed.

The seasonally adjusted jobless rate of 2.5% in June is slightly below the median forecast of 2.6% (only a few economists expected a slight improvement to 2.5%). The unemployment rate is below the recent high of 3.1% in October 2020 but there is still some room for improvement toward 2.2% seen in December 2019, just before the pandemic triggered a global economic slump.

Compared to the previous month, the number of people who began looking for work and thus were counted as being unemployed fell a sharp 7.8% in June after rising 2.0% the previous month. Tight labor conditions and rising wages have prompted more women and retirees to join or return to the workforce in recent months: Some of them appear to have found a job. The number of those who quit to look for better positions also dipped 1.3% after falling 3.8%.

Those two factors more than offset the impact of jobs cuts and retirements, whose combined number rose 4.5% in June after being unchanged in May.

From a year earlier, the number of employed rose 370,000 to an unadjusted 68.22 million in June for the 23rd straight increase, led by a continued sharp rise among women and a rebound in men. Regular jobs rose on year for the eighth straight month while non-regular jobs dropped for the second straight month after recent sharp gains. It followed increases of 210,000 in May, 90,000 in April, 270,000 in March and 610,000 in February.

The number of unemployed rose 20,000 on the year to an unadjusted 1.81 million in June for the third straight increase, after rising 50,000 in May and 30,000 in April and falling 80,000 in March. It has drifted down from a pandemic peak of 2.17 million in October 2020. December 2023’s 1.56 million was the lowest since 1.46 million in December 2019.

The overall employment increase in June from a year earlier was led by a surge in the wholesale/retail industry, which now gained for the third consecutive month. The increase in jobs in the hotels, restaurants and bars category has slowed on waning pent-up demand for traveling. Employment at medical and welfare service providers rebounded after a dip in May.

Academic research and technical services also posted a solid gain while jobs at education support providers marked the first drop in three months. Job creation at information communications firms including news media, mobile phone carriers and software developers continued slowing after sharp gains.

The construction industry showed no job growth after a recent pickup. The number of workers in the manufacturing industry fell for the fourth straight month but the pace of decline has moderated.

In its monthly economic report for July released last week, the government maintained its overall assessment, saying the economy is recovering “moderately” and likely to stay on course as many firms are raising wages at a higher pace to secure workers and although exports are now being largely flat. It also repeated that employment conditions are “showing signs of improvement.”