Employment in Japan fell unexpectedly in December, signalling that employment was continuing to heal at the end of 2021 before the spread of the omicron variant.
The number of workers was 490,000, the most since 1986, and the jobless rate went down to 2.7%, the internal affairs ministry said Tuesday. Analysts had predicted that the unemployment rate would hold at 2.8%.
There was still more slack in the labor market than before the flu, as a result of the separate report showing jobs offers outnumbered applicants by a slightly larger margin. There were 116 jobs offered for every 100 applicants in December, compared to 155 positions advertised two years ago.
The emergence of omicron and a sharp escalation in infections this month have dimmed the economy's prospects this quarter, while the jobs market was showing signs of further healing at the end of 2021.
The daily infection numbers have jumped from fewer than 500 at the beginning of January to over 80,000 nationwide, and nearly half of Tokyo s hospital beds for COVID 19 patients are occupied, close to the threshold that Gov. has set for the first time in a year. Yuriko Koike said that it may trigger a call for a renewed state of emergency in the capital.
The job market was improving gradually until December, but omicron makes it hard to discern the strength of the labor market going ahead, said Koya Miyamae, head of SMBC Nikko Securities. Some businesses may be hesitant to hire and job-seekers may choose to wait for now. Japan's economy is regaining to growth in the last three months of 2021, but the rapid spread of omicron has increased numbers of analysts citing the risk of another contraction this quarter.
A drop in Japan's jobless rate in December reflected strong labor demand in the manufacturing sector, where new job offers jumped 34.6% from a year earlier in the year. A rise in the number of involuntary job losses points to downside risks from weakness elsewhere, particularly in the service sector, which is most affected by virus-containment measures, said Yuki Masujima, Bloomberg economist.
More damage to the recovery will result in shorter timetables for new hiring and weaken the momentum for wage hikes that are needed to power more robust consumer spending or spark more sustainable inflation.
The prime minister Fumio Kishida's government shouds out job retention subsidies that will protect employment even if the economy doesn't improve. Even in the depths of the crisis, Japanese unemployment never went above 3.1%.
Japan's jobless rate has been almost unchanged due to government fiscal support, but we have to consider whether it is good for the economy in the long term, said SMBC Nikko s Miyamae.