Japan's June job availability up to 1.10, best in 22 years

Japan's job availability improved in June to its best level in 22 years, as companies were eager to hire more workers amid labor shortages in a wide range of industries such as healthcare and construction, with the economy recuperating, the government said Tuesday.

The unemployment rate, however, rose for the first time in 10 months to 3.7 percent during the month from 3.5 percent in May, the Ministry of Internal Affairs and Communications said. A ministry official attributed the climb to more women seeking employment due to economic recovery.

The ratio of employment offers to seekers increased for the 19th straight month to 1.10 in June from 1.09 in the previous month, which means 110 positions were available for every 100 job seekers, the Ministry of Health, Labor and Welfare said.

It was the highest level since June 1992, soon after the burst dof the country's asset-inflated bubble economy.

The unemployment rate for men increased 0.1 percentage point from May to 3.8 percent, and that for women rose 0.1 point to 3.5 percent, the internal affairs ministry said.

The number of unemployed people rose 110,000, or 4.7 percent, from the previous month to 2.44 million, as those voluntarily quitting jobs went up 3.4 percent to 920,000, and those doing so involuntarily also climbed 1.4 percent to 720,000, the ministry said.

By industry, the agricultural and forestry industry and the manufacturing sector cut jobs from a year earlier in June, though the healthcare and welfare sector, the wholesale and retail sales segment as well as the construction industry boosted jobs, it said.

"The employment situation has been picking up. We often see a rise in the unemployment rate when the economy is recovering, as more people try to join the job market," the ministry official said.

But Japan's economy has shown signs of slowing down, with the 3-percentage-point consumption tax hike to 8 percent hurting private spending in the absence of wage growth, dampening corporate profits and worsening the employment situation ahead, some analysts said.

"It is uncertain whether the labor market will remain healthy, given that the tax hike from April 1 has been stifling consumer spending," said Takeshi Minami, chief economist at the Norinchukin Research Institute.

"Unless wages grow, the Japanese economy may fall into a vicious cycle, where consumption weakens and corporate performance deteriorates, which could make companies reluctant to hire workers and discourage households from spending further," Minami added.

In June, average Japanese monthly household spending fell for the third straight month, down a price-adjusted 3.0 percent from a year earlier to 272,791 yen, while the average monthly income of salaried households came to 710,375 yen, down 6.6 percent in real terms, the internal affairs ministry said.

Following a 4.6 percent decrease in April, household spending plunged 8.0 percent in May, down at its fastest pace since March 2011, when the powerful quake-tsunami disaster ravaged northeastern Japan, significantly blurring the outlook for the world's third-biggest economy.

Household spending figures are a key indicator of private consumption, which accounts for about 60 percent of Japanese gross domestic product.