Japan February Jobless Rate Unexpectedly Rises to 5-Month High of 2.6% on Job Cuts, New Job Seekers, after Easing to Near 4-Year Low of 2.4% in January

–Employment Up on Year for 19th Straight Month, Led by Manufacturing, Surge in Communications Jobs; Gains at Hotels, Restaurants Slow

By Max Sato

(MaceNews) – Japanese payrolls posted a 19th straight rise on year in February amid labor shortages at factories, communications firms, hotels and restaurants, but the unemployment rate unexpectedly rose to a five-month high of 2.6% after falling to a nearly four-year low of 2.4% in January from 2.5% in December, data released Friday by the Ministry of Internal Affairs and Communications showed.

The seasonally adjusted jobless rate of 2.6% in February was higher than the median forecast of 2.4% and rose to the level seen from July to September last year. The January rate was the lowest since 2.4% in February 2020.

Compared to the previous month, the number of people who lost their jobs or retired jumped 22.2% after two months of decline. The number of those who quit to look for other openings rose 2.7% after a fall in January while that of people who began looking for work and thus were counted as being unemployed also rose for the second month in a row, up 6.5%. The number of employed men posted the second straight monthly gain and that of women rebounded sharply.

The latest 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.

The jobless rate averaged 2.6% in 2023, unchanged from 2022, when it improved from 2.8% seen in both 2021 and 2020 but still above 2.4% in the pre-pandemic year of 2019.

Compared to a year earlier, the number of employed rose 610,000 to an unadjusted 67.28 million in February for the 19th straight increase, led by a sharp rise among women and also a rebound in men. Both regular and non-regular jobs marked sizable gains. It followed increases of 250,000 in January, 380,000 in December and 560,000 in November.

But the number of unemployed also rose 30,000 on the year to an unadjusted 1.77 million in February, after falling 10,000 in January and 20,000 in December and rising 40,000 in November. It has drifted down from a pandemic peak of 2.17 million in October 2020. December’s 1.56 million was the lowest since 1.46 million in December 2019.

The overall employment increase in February from a year earlier was led by a continued surge in job creation at information communications firms including news media, mobile phone carriers and software developers. The number of workers in the manufacturing industry rose for a fourth straight month and education support service providers also raised the pace of hiring. The hotels, restaurants and bars category also continued hiring more people to fill vacancies but at a slower pace.

There was a rebound in jobs in the medical and welfare category after a slump in January. Even financial firms raised payrolls from year-earlier levels after cutting jobs for eight months. Employment in the wholesale and retail industry rose for the first time in four months.

On the downside, employment in the real-estate and goods leasing category plunged in February after showing a solid gain in January and rising sharply at the end of the year. The construction industry slashed jobs on the year by a wide margin in February after shedding slightly in January and adding in December.