Japan jobless rate lowest since 1993 as Shinzo Abe marks five years as prime minister

Prime Minister Shinzo Abe’s government will continue to focus on boosting the economy, the government’s top spokesman said Tuesday, the fifth anniversary of Abe’s return to power in his second stint as premier

PUBLISHED : Tuesday, 26 December, 2017, 1:23pm
UPDATED : Tuesday, 26 December, 2017, 9:14pm

Japan’s unemployment rate in November dipped to its lowest level since November 1993, official data showed Tuesday, offering another sign that the world’s third-largest economy is on track to recovery even if the pace is slow.

Figures released by Japan’s government came on the fifth anniversary of Shinzo Abe’s return to power in his second stint as premier.

“Since the launch of the government, we have cited economic recovery as the top priority,” Chief Cabinet Secretary Yoshihide Suga said at a press conference.

Abe said the backing he has received from voters has helped him overcome the challenges he has faced over the past five years.

“I have got over a variety of barriers thanks to the strong support of the citizens in the (past) five national elections,” said Abe, who has sought to kick-start the economy with his “Abenomics” policy mix.

Data showed unemployment stood at 2.7 per cent last month while the jobs-to-applicants ratio improved slighty, up 0.01 per cent from the previous month to 1.56 in November – the highest level in almost 44 years.

Despite the upbeat figures, however, many Japanese people have not felt the effects of economic recovery and Abe has yet to declare the achievement of one of his key goals -pulling the world’s third-largest economy out of decades-long deflation.

The latest data come as Japan has notched up seven straight quarters of economic growth – the longest positive run for 16 years – with the upcoming 2020 Olympic Games giving the economy a shot in the arm.

“Japan’s economy is expected to keep expanding through the first half of next year,” Masaki Kuwahara, senior economist at Nomura Securities, said.

Confidence among Japan’s biggest manufacturers is also at an 11-year high, a key central bank survey showed earlier this month, as the world’s number-three economy picks up pace.

However, consumer spending has remained weak and deflation continues to stalk the economy.

Japan has battled deflation for many years and the central bank’s ultra-loose monetary policy appears to be having limited impact.

Other data showed Tuesday that Japan’s consumer prices rose for the 11th straight month in November, but inflation was still far from the Bank of Japan’s (BOJ) two-percent inflation target seen as crucial to revive the world’s third-largest economy.

The core inflation rate was a 0.9 per cent rise year-on-year in November, according to data published by the internal affairs ministry, far below the two-per cent target set by the BOJ.

Market consensus was a 0.8 per cent rise, according to data compiled by Bloomberg.

When the volatile prices for fresh food and energy were stripped out, prices rose by even less – 0.3 per cent, the ministry said.

November household spending – seen as key for exiting deflation – expanded 1.7 per cent from the same month a year earlier – much stronger than market consensus of a 0.5 per cent rise.

Household spending had remained flat in October after falling by 0.3 per cent in September and rising by 0.6 per cent in August.

Strong household spending in November “may be a reaction to the weak October figure that had reflected” bad weather at the time, Kuwahara said.

“But as shown in the low unemployment rate and the number of jobs expanding, the labour market conditions are favourable and household income keeps gradually rising,” he said.

But he warned strong inflation without sufficient rise in wages “hurts domestic demand, having negative impact on the economy”.

Abe’s government has pressed the country’s major companies to raise their employees’ salaries in an annual wage negotiations, often dubbed as the “government-made labour offensive”.

Japan’s weak inflation stands in sharp contrast to other major economies whose central bankers are looking to wind up their easing policies.

The US Federal Reserve last week announced a widely expected quarter point rate hike, and US policymakers have forecast another three rate hikes in 2018.

Meanwhile, the European Central Bank has announced it would halve its massive bond purchases from January as the euro zone recovery gathers pace, allowing the Frankfurt institution to begin winding down its crisis-era stimulus measures.

Agence France-Presse and Kyodo