Japan’s jobless rate likely remained unchanged in March, to drop below 3 pct by end-2016

Japan’s jobless rate is expected to have remained unchanged in March from February’s rate of 3.3%, according to Societe Generale. The job-to-applicant ratio is also expected to have remained the same at 1.28 last month. People not in the labor force rose 470k in February from January, whereas the total number of employees declined 580k.

Meanwhile, wage growth is accelerating due to considerable improvement in working conditions. Wage is increasing mainly for part-time workers. Several workers are looking for better working conditions. Therefore the jobless rate is volatile, added Societe Generale.

For some time, the jobless rate has continued to be lower than 3.5% and the demand and supply of labor have become tight. Companies in Japan have begun employing full-time regular people, which is seen by the increase of employees by 440,000 in 2015. A huge number of employees are also likely to be hired in April, noted Societe Generale.

“We expect the unemployment rate to fall below 3.0% by the end of 2016”, said Societe Generale.

Meanwhile, the average wage rise in the 2016 spring annual wage talks continued to be about 2.1% y/y, lower than the 2.5% y/y in 2015. Even if the jobless rate continues to considerably fall, the aggregate wages growth appears to be slow, according to Societe Generale.