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Japan jobless rate falls below 4% in June for 1st time since Oct. 2008

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(Globalpost/GlobalPost)

Japan's unemployment rate improved to 3.9 percent in June from 4.1 percent in the previous month, falling below 4 percent for the first time in four years and eight months, the government said Tuesday, as companies increased hiring amid signs of economic recovery.

The jobless rate fell as Japan's job availability improved in the month to its best level in five years.

The figures indicated that Prime Minister Shinzo Abe's economic policies centering on drastic monetary easing have helped to push down the yen and boost manufacturers' exports, leading to improvement in the labor market, analysts said.

The country's jobless rate fell to its lowest level since October 2008, immediately after U.S. investment bank Lehman Brothers Holdings Inc. went bankrupt in September that year, triggering a global financial crisis.

Policymakers expressed optimism about the labor market, saying the government will continue to take measures to bolster the economy and create jobs.

"An economic recovery on the back of Abenomics has started to promote employment," Chief Cabinet Secretary Yoshihide Suga said at a press conference.

"We will make every effort to end deflation at an early date and achieve sustainable economic growth led by the private sector," said Suga, the government's top spokesman.

Japan's labor market is likely to improve further given that the outlook for the nation's economy has become brighter with exports bouncing back, some analysts said.

A falling yen usually supports the country's exporters by making Japanese products cheaper abroad and increasing the value of overseas revenue in yen terms. A rebound in exports has exerted a favorable influence on affiliated businesses.

The yen dropped against the U.S. dollar by 18.9 percent from a year earlier in June, according to data released by the Finance Ministry.

Japan's economy is estimated to have grown at an annualized rate of around 3 percent in inflation-adjusted terms in the second quarter from April to June, according to a survey of economists conducted by Kyodo News earlier this month.

Abe's government has said it will carefully monitor economic developments to make a final judgment in the fall on whether to raise the sales tax rate to 8 percent from the current 5 percent in April next year as scheduled.

The drop in the jobless rate could affect the government's decision on the tax issue.

Welcoming the unemployment rate's slide below 4 percent, Finance Minister Taro Aso said at a news conference that the jobs data "will become one indicator" in considering the advisability of the consumption tax hike, which experts say may choke economic recovery.

In June, the unemployment rate for women decreased to 3.5 percent from 3.9 percent in May, while for men it declined to 4.1 percent from 4.2 percent, the Ministry of Internal Affairs and Communications said in a preliminary report.

The number of unemployed people fell 160,000 from the previous month to 2.54 million, the internal affairs ministry said.

By industry, manufacturers, including automakers and electric-appliance makers, added 220,000 jobs, the ministry said.

Separate data released by the Ministry of Health, Labor and Welfare showed the nation's job availability improved for the fourth straight month. The ratio of employment offers to seekers climbed to 0.92 in June from 0.90 in May, meaning 92 positions were available for every 100 job seekers.

Job availability was at the best level since June 2008, when it also stood at 0.92.

New job openings in the hotel and restaurant sectors increased 13.5 percent as the yen's weakness helped increase the number of foreign tourists, while new openings at manufacturers rose 0.8 percent for the first rise in 13 months.

But some economists said it remains uncertain whether the country's labor market will return to a strong recovery path.

"Even though exports are growing, the employment situation is unlikely to improve in a full-fledged manner unless domestic demand increases," said Takeshi Minami, chief economist at the Norinchukin Research Institute.

"To boost domestic demand, the government has to act to pull the economy out of deflation as soon as possible," he added.

==Kyodo

http://www.globalpost.com/dispatch/news/kyodo-news-international/130730/japan-jobless-rate-falls-below-4-june-1st-time-oct-200