Japan March Jobless Rate Flat at 2.6%; Job Cuts Slower but More People Quit for Better Positions amid Labor Shortage, Rising Wages

–Employment Up Y/Y for 20th Straight Month, Led by Medical, Hotels, Restaurants; Manufacturing Slumps After Recent Gains

By Max Sato

(MaceNews) – Japanese payrolls posted a 20th straight rise on year in March amid labor shortages at hospitals, hotels, restaurants and telecommunications firms while the unemployment rate was unchanged after rising unexpectedly to a five-month high of 2.6% in February from a nearly four-year low of 2.4% in January, data released Tuesday by the Ministry of Internal Affairs and Communications showed.

The seasonally adjusted jobless rate of 2.6% in March was slightly higher than the median forecast of 2.5%. 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 rose 4.5% in March, slowing from a 22.2% jump in February. The number of those who began looking for work and thus were counted as being unemployed was flat after rising in the previous two months. Those two factors were offset by a continued solid pace of increase in the number of those who quit to look for better positions, up 2.6% versus 2.7% in February, amid tight labor conditions and rising wages.

In its monthly economic report for March released last week, the government maintained its overall assessment, saying the economy is recovering moderately backed by a high pace of wage hikes amid widespread labor shortages. It also repeated that employment conditions are “showing signs of improvement.”

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 fiscal 2023, unchanged from fiscal 2022, when it improved from 2.8% in fiscal 2021 and 2.9% in fiscal 2020 but still above 2.3% in the pre-pandemic year of fiscal 2019, which was the lowest since 2.2% in fiscal 1992.

Compared to a year earlier, the number of employed rose 270,000 to an unadjusted 67.26 million in March for the 20th straight increase, led by a sharp rise among women and a modest gain in men. Both regular and non-regular jobs continued to mark solid gains. It followed increases of 610,000 in February, 250,000 in January, 380,000 in December.

The number of unemployed fell 80,000 on the year to an unadjusted 1.85 million in March, after rising 30,000 in February and falling 10,000 in January and dipping 20,000 in December. 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 March from a year earlier was led by a jump in the medical and welfare industry as well as in the “other services” category. There was continued job creation at information communications firms including news media, mobile phone carriers and software developers. The hotels, restaurants and bars category also continued hiring more people to fill vacancies.

On the downside, the number of workers in the manufacturing industry slumped to mark the first drop in five months and education support service providers showed a decline after recent gains. The construction industry slashed jobs for the third straight month. Financial firms trimmed jobs payrolls from year-earlier levels again after showing the first increase in nine months in February.

Employment in the wholesale and retail industry slipped in March after posting the first rise in four months in February. The real-estate and goods leasing category shed jobs for the second straight month.