Tuesday July 31, 07:58 AM
Japan's jobless rate hits nine-year low
TOKYO (AFP) - Japan's unemployment rate dropped to a more than nine-year low of 3.7 percent in June while household spending rose as Asia's largest economy continued its longest post-war recovery, data showed Tuesday.
The fall gave a much needed boost to Prime Minister Shinzo Abe after a weekend election drubbing at the hands of voters who say they want him to focus more on the economy and reducing wealth inequalities.
Average wages, however, fell again as companies replaced retiring baby boomers with younger graduates on lower salaries.
The jobless rate fell 0.1 percentage points in June to the lowest level since February 1998, beating market expectations for no change.
"The tone of the economic recovery is firm," Economic and Fiscal Policy Minister Hiroko Ota told reporters following the figures.
The total number of unemployed declined 370,000 from a year earlier to 2.41 million in June, the Ministry of Internal Affairs and Communications said.
Analysts said the tightening jobs market should help underpin Japan's economic recovery, which according to the government is now the longest since World War II.
"The current (economic) expansion, which began in January 2002, has accompanied a solid improvement in the employment environment," noted Barclays Capital economist Takuji Aida.
The jobless rate has fallen from 5.4 percent in January 2003, shedding 1.7 percentage points over the last four and a half years, he added.
There were 107 jobs available in June for every 100 job seekers, compared with 106 in May.
The strengthening labour market should help to stimulate consumer spending which has lagged behind the wider recovery, analysts said.
Japan's average monthly household spending gained 0.1 percent in June from a year earlier, up for a sixth consecutive month, the government also reported.
But the increase was smaller than the 0.7 percent gain economists had forecast and a 0.4 percent rise in May.
The household spending data is one of the key indicators on personal consumption, which makes up about 55 percent of Japan's gross domestic product.
Japan's labour market has been tightening as the economy recovers from its long slump and companies compete to hire skilled young graduates.
But firms have been reluctant to share more of their fast-growing profits with workers, which has also hindered the economy's exit from deflation and made it harder for the central bank to justify another interest rate rise.
Average monthly cash wages per worker fell 1.1 percent in June from a year earlier, separate official figures showed.
The labour market "is tightening ... (but) its influence on consumer prices is slow," Minister Ota said.
Japan's consumer prices fell for a fifth straight month in June, figures showed last week.
But analysts were hopeful that falling unemployment would eventually filter through to salaries.
"We believe the tightening labor market will lead to a clearer increase in wages going forward," said Barclays Capital's Aida.
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