Japan s unemployment rate went up in January due to a record wave of COVID 19 infections that prompted renewed restrictions that are likely to slow down progress in the recovery of the labor market in February and March.
The jobless rate went to 2.8% as the number of people working fell by a seasonally adjusted 190,000 from December, the internal affairs ministry reported Friday. The unemployment rate was expected to hold steady at 2.7%, according to analysts.
A separate report offered a more encouraging view of the labor market, as job offers outnumbered applicants by a greater margin, a leading indicator of the employment trend. In January, there were 120 jobs offered for every 100 applicants, compared to 116 positions a month earlier.
The employment figures showed that the surge in omicron cases and renewed restrictions in January triggered the loss of jobs, a setback for a labor market that had been slowly healing.
Prime Minister Fumio Kishida has decided to extend the duration of quarantined virus restrictions in Tokyo and 17 other prefectures, which will put further pressure on an economy that some analysts say will contract this quarter.
The uncertainties stemming from Russia's invasion of Ukraine and its impact on global trade, fuel prices, and sentiment are also weighing on the economy's prospects.
The impact hasn't been that dramatic, as the labor market has stalled after quasi-emergency measures were taken due to the spread of omicron, said Taro Saito, director of economic research at the NLI Research Institute.
As the more infectious omicron variant spread rapidly across the country, the daily infection numbers went from around 500 at the beginning of January to around 100,000 a month later.
The semi-state of emergency is in place in some major cities because of the elevated levels. Bars and restaurants in those locations will be asked to close early for a few more weeks.
The extension of vaccine-containment measures in a majority of cities through early March will cause labor conditions to weaken further in February, according to Yuki Masujima, economist at Bloomberg Economics. A sub-index measuring employment in the Jibun Bank Services PMI data stayed in contractionary territory last month. Japan has managed to avoid deep scarring to its labor market through government support and a corporate culture that doesn't resort to layoffs, with the jobless rate not far from its pre-pandemic level of 2.4% even after the January increase.
The data shows that COVID 19 has had an uneven effect on industries.
More people are now employed in healthcare and specialist services compared to pre-pandemic levels in January 2019, there are around 400,000 fewer workers in the retail and wholesale sector and 350,000 fewer employed in bars, restaurants and hotels.