Japan’s jobless rate hits one-year high as virus hurts economy

Unemployment in Japan, while lower than many other countries, is expected to worsen in the coming months.

Japan economy coronavirus
Japan's seasonally adjusted unemployment rate rose to 2.5 percent, its highest level since March last year and matching economists' 2.5 percent median forecast [File: Issei Kato/Reuters]

Japan’s March jobless rate rose to its highest in a year, while job availability slipped to a more than a three-year low, official data showed on Tuesday, as the coronavirus outbreak and containment measures caused the nation’s job market to deteriorate.

While Japan’s comparatively low jobless rate is the envy of many nations, rises in the politically sensitive figure could lead to calls for Prime Minister Shinzo Abe’s government to do more to stimulate the economy.

The seasonally adjusted unemployment rate rose to 2.5 percent, its highest level since March last year, internal affairs ministry data showed, matching economists’ 2.5 percent median forecast.

The unemployment rate stood at 2.2 percent in December, the lowest since 1992.

The jobs-to-applicants ratio fell to 1.39 in March, the lowest since September 2016 and below the median forecast of 1.40, health ministry figures showed.

“The employment situation is expected to worsen further in April, so I think it’s still the start of a deterioration,” said Atsushi Takeda, chief economist at Itochu Research Institute.

“There is no doubt that the number of unemployed people is rising,” he said. “I think there will be a sharp reduction in job offers in April.”

While conditions in Japan’s labour market are not as severe as in the United States, unemployment in the country could rise to 4 percent in the months ahead, Takeda said.

“A temporary increase (in unemployment) can’t be avoided, I think,” he said.

The steep drop-off in the jobs-to-applicants ratio also reflected a change in the survey method from January, a health ministry official told Reuters news agency.

The ratio had stayed at a more than 40-year high of 1.63 from late 2018 through to early last year.

The latest batch of data is likely to increase pressure on the government and Bank of Japan (BOJ) to take steps to prevent the labour market from worsening as declining demand at home and abroad hits businesses’ bottom lines.

To ease the pain on the economy, the BOJ on Monday unveiled fresh steps to ease corporate funding strains and pledged to buy unlimited amounts of bonds to keep borrowing costs low as the government tries to stimulate demand by increased spending.

The central bank also slashed its growth forecast and projected inflation would come in well below its 2 percent target for three more years, suggesting its near-term focus will be on fighting the coronavirus crisis.

Last week, the government boosted its spending package to a record $1.1 trillion yen ($10.2 trillion) to expand cash payouts to every citizen, as the coronavirus outbreak threatens to hit large parts of the world’s third-largest economy.

The package will be funded partly by issuing more bonds, straining Japan’s already tattered finances.

Source: Reuters