Japan’s job market is the tightest it’s been in more than 40 years, raising prospects for higher consumer spending and inflation.
The employment data along with solid retail figures released on Tuesday were the latest in a string of upbeat numbers on the country’s economy, which has been humming along nicely in the past year.
Persistently low inflation remains one of the few irritants for policymakers, though, reports Reuters.
Prime Minister Shinzo Abe has been urging companies to raise wages 3.0 per cent at spring labour talks to spur consumption and lift inflation toward the Bank of Japan’s 2.0 per cent target.
The jobs-to-applicants ratio rose to 1.59 in December from 1.56, the highest since January 1974, labour ministry data showed. That means there were nearly 1.6 jobs for every applicant.
Retail sales jumped 3.6 per cent in December from a year earlier, separate data showed, beating expectations and the biggest increase since April 2015.
Household spending dipped 0.1 per cent in the previous month from a year earlier.
Exports are strong, corporate profits are setting records and Japanese stocks are at their highest in 26 years - although they dropped Tuesday.
The bright outlook is welcome news for the BOJ, which has been pump priming the economy with massive stimulus since 2013.
A Reuters survey last month showed that two-thirds of Japanese companies think the government’s push to raise wages by 3.0 per cent is a tall order, with some dismissing it out of hand,
The Japanese Trade Union Confederation is pushing for a 4.0 per cent hike. And the largest business lobby, the Keidanren, has thrown its considerable weight behind the government’s campaign to raise wages by 3.0 per cent.
Data showed that the labour participation rate for men was 83.2 per cent, up 0.6 percentage point from a year earlier. For women, it rose 1.4 points to 68.2 per cent.
To ease the labour shortage, Japan has also been accepting more foreign workers after the government made changes to the way it grants visas for both low- and high-skilled workers.