Japan’s job-market shows an incredible ratio

7 years ago - Published in Finance, Fundamental Analysis

Japanese labour market conditions remain incredibly strong, according to data released by the Japanese government today.
Japan's job openings-to-applicants ratio came to 1.52 in July on seasonally adjusted terms, rising 0.01 of a point from June and improving for the fifth straight month, the Ministry of Health, Labor and Welfare said on Tuesday.

The ratio measures the number of jobs available compared to the number of active job seekers. That means that for every 100 people seeking work in July, there were 152 jobs available, the most since February 1974. July's ratio exceeded that seen in the early 1990s, during Japan's economic bubble era.

That reflects not only improved economic conditions in Japan in the first half of 2017, but also the nation’s rapidly-ageing demographics which are limiting the availability of labour.

The reading was in line with a median estimate by 18 research institutions, compiled by QUICK.

The leading indicator for the labor market shows the number of job postings for every job seeker — excluding new graduates — at public employment offices.

For permanent jobs, the ratio of job openings to applicants was 1.01 to 1, unchanged from June, when it rose above parity for the first time since record keeping began in November 2004. 

“We’ll probably see a gap between companies that have the capacity and pricing power to raise prices and those that don’t,” said Mari Iwashita, chief market economist at SMBC Friend Securities.

“It’s not back to days of deflation when you win just by cutting prices. That’s good for the economy. But it means companies are faced with a more complex business environment.”

Meanwhile, the unemployment rate stood at 2.8% in July on a seasonally adjusted basis, unchanged from the previous month, according to data released by the Internal Affairs Ministry the same day.
 
The latest unemployment rate was also in line with a median estimate by 19 research institutions surveyed by QUICK.

The total number of workers came to 65.63 million, up 590,000 from a year earlier, with both regular and nonregular workers increasing.  The unemployed population totaled 1.91 million, down 120,000 from the previous year.