Preview: Japan February Unemployment Rate Forecast to Remain at 2.7%, Lowest Among G7, Focus on Payrolls After 1st Drop in Nearly 4 Years in January

By Chikafumi Hodo

Tuesday, March 31
0830 JST (2330 GMT/1930 EDT Monday, March 30) The Ministry of Internal Affairs and Communications releases the February unemployment rate.
Mace News median: 2.7% (range: 2.6% to 2.7%) vs. 2.7% in Jan; 2.6% from Aug to Dec, over 5-year low of 2.3% in July, 2.5% from March to June

TOKYO (MaceNews) – The seasonally adjusted unemployment rate in Japan is expected to hold steady at 2.7% in February, slightly above its recent trend but well below the rates in other major economies, as labor shortages linger in the sectors with long work hours and lower pay.

The jobless rate ticked up to 2.7% in January, hitting the highest since 2.7% July 2024, after staying at 2.6% in the previous four months and rising to the level in August from a five-year low of 2.3% the previous month.

Japan’s jobless rate stood low and steady at 2.5% in 2025, half of the 5.2% average among the Group of Seven leading economies. The rate in the United States was relatively low at 4.3% that year, up from 4.0% previously, while that in France, the highest in the G7, climbed to 7.7% from 7.4%.

Payrolls may bounce back in February after the total number of employed unexpectedly posted its first year-on-year drop in 42 months in January. Large numbers of self-employed and their family staff wrapped up their business and firms continued shedding non-regular positions while adding more regular jobs, the latter of which is a good omen for overall economic health.

The slight increase in overall unemployment in January was caused by higher jobs cuts and retirements compared to a year earlier. More people also quit to seek other openings, a sign that economic conditions are relatively favourable and firms are encouraging higher mobility. The number of people who began looking work and thus were counted as jobless continue rising in January but at a slower pace.

Manufacturers slashed their payrolls in January, offsetting continued solid gains at construction and telecommunications firms. Hover, both the manufacturing and wholesale/retail sectors remain the main employers, each holding more than 10 million workers on their payrolls and together accounting for 30% of the total number of the employed. 

The government continues to describe employment conditions as “showing signs of improvement” in its latest monthly economic report for March, unchanged since the last upgrade in June 2023.