Japan's May unemployment rate likely rose, but employment situation to strengthen in 2015

While many companies are increasing hiring, the new positions are likely to be filled easily as many workers who had previously dropped out of the labour force are likely to return to work.

"The unemployment rate to rise to 3.4% from 3.3% in April. In 2015, the unemployment rate to fall below 3.5%, corresponding to the NAIRU level. The job-to-applicant ratio is likely to remain unchanged at 1.17 in May", says Socgen.

This, thus should enable Japan to make a full exit from deflation. However, if this situation fails to materialise, the BoJ's 2% price stability target will be difficult to achieve. But the below 3% unemployment level currently seems very far away.