Japan’s unemployment fell unexpectedly in December, indicating that employment was recovering before the rapid spread of the Omicron variant in late 2021.
The Ministry of Internal Affairs reported on Tuesday that the unemployment rate had dropped to 2.7%. Analysts expected the rate to remain at 2.8%.
A separate report showed that jobs are offered with a slightly higher margin than applicants, although the labor market was still more sluggish than before the pandemic. In December, 116 jobs were offered for every 100 applicants, compared to 155 posts advertised two years ago.
While the jobs market was showing signs of a further recovery in late 2021, the emergence of Omicron this month and a sharp rise in infections have dimmed the economy’s prospects for the quarter.
The daily infection count rose from less than 500 to more than 80,000 in early January and nearly half of Tokyo’s hospital beds are occupied, which Governor Yuriko Koike has said could trigger a new state of emergency in the capital. Can do.
Japan’s economy appears to be returning to growth in the last three months of 2021, but Omicron’s rapid spread in recent weeks has led analysts to cite the risk of another contraction in the quarter.
“The situation is changing rapidly. Now the focus is on how weak the economy will be in the first quarter,” economist Yoshiki Shinke of the Dai-ichi Life Research Institute wrote in a report on Monday.
What does Bloomberg Economics say…
“We expect labor-market conditions to loosen in January as the virus-related restrictions introduced in January continue to impact businesses. The employment sub-index PMI data in Jibun Bank Services fell well below the range between expansion and contraction.”
Yuki Masujima, economist
Continued job retention from Prime Minister Fumio Kishida’s government is likely to reduce employment even if the economy softens.
Still, more damage to recovery would set back the timetable for new recruits and undermine any incentives for wage increases that are needed to spur stronger consumer spending or fuel more sustainable inflation.
A report on Monday showed the biggest drop in Japanese consumer confidence since April 2020, with fears of a collapse in the jobs market being the biggest concern.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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