Unemployment in Japan Down to 20-Year Low

The supplementary budget for fiscal 2015 ending March 31 is likely to be worth more than ¥3 trillion, government sources said.

Japan has offered one trillion yen each for the last two years.

The additional fiscal impulse comes at a time of growing economic strains, with Japan’s relapse into recession in the third quarter and a cooling China stoking uncertainty about the outlook.

The decline was predominantly due to the effect of falling energy costs, which the Bank of Japan has said it will look through in determining whether additional monetary easing is necessary to achieve the inflation target.

Lack of wage growth has led to sluggish consumption – a big worry given the slowdown in China’s economy and plans to raise sales tax from 8% to 10% in the spring of 2017.

The figure, the lowest since July 1995, marked a 0.3 percentage point drop from 3.4 percent in September, the internal affairs ministry said in a preliminary report.

Japan’s unemployment rate fell to a two-decade low in October, according to data released Friday. However, this did not translate into a concomitant increase in wages and consumer spending, which fell 2.4 percent over the same month a year earlier, against the forecast of a 0.1 percent rise.

“Job offers are surging but the average sum each employee is earning isn’t rising much”.

Consumer spending, meanwhile, fell 2.4 per cent from the same month a year earlier, and average incomes fell 0.9 per cent. Japan’s inflation rate also was lower in October, with core inflation excluding volatile food prices down 0.1 per cent for the third month in a row.

Japanese Prime Minister Shinzo Abe.

In its monthly report for November the Cabinet Office said the “Japanese economy is on a moderate recovery, while weakness can be seen in some areas”, adding that downside risks still remain including the slowing down of emerging Asian economies.