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No.220(2016/9/30)
Economic and Labour Situation in Japan (September 2016)

Japan's Economy Growing Weakly
According to a preliminary report issued by the government, the Japanese economy was flat on a quarterly basis, with gross domestic product in the April-June period growing by an annual rate of a mere 0.2%. Japan's economic recovery has been sapped by weaker exports and business investment.
By GDP component, exports fell by 1.5% quarter-on-quarter; exports have been suffering a continuous contraction since the October-December quarter of last year. Capital expenditure contracted by 0.4% from the previous quarter, marking the second consecutive decline. Consumer spending, which accounts for about 61% of Japan's economic output, rose by 0.2% quarter-on-quarter, and housing investment increased by 5% quarter-on-quarter.
In view of the weak GDP growth, Prime Minister Shinzo Abe proposed a new $270 billion stimulus package to revitalize the economy, break deflation, and raise Japan's growth potential. The government will submit the supplementary budget draft for fiscal 2016 to an extraordinary session of the Diet this fall.

Industrial Production
Industrial production is fluctuating indecisively but shows signs of increasing in part.
Production remained flat, shipments and inventory ratio increased, and inventories decreased.

2010 average=100
  Seasonally adjusted index Original index
  Index Change from previous month (%) Index Change from previous year (%)
Production 96.9 0 99.1 3.8
Shipments 96 0.9 96.4 3.8
Inventories 111.2 2.4 113.7 1.8
Inventory Ratio 117.1 0.9 116.7 3.8

Industries that mainly contributed to the increase were as follows: (1) transport equipment, (2) electronic parts and devices, and (3) electrical machinery, in that order.

According to the Survey of Production Forecast in Manufacturing, production was expected to increase by 4.1% in August and decrease by 0.7% in September.

Family Income and Expenditure Survey in July
(1) Expenditure for Two-or-More-Person Households

The average monthly consumption expenditure per two-or-more-person household in July was 278,067 yen, down 0.9% in nominal terms and 0.5% in real terms year-on-year.

(2) Income and Expenditure for Workers' Households
The average monthly income per household stood at 574,227 yen (including bonus payments), down 2.2% in nominal terms and 1.8% in real terms year-on-year. The average consumption expenditure was 302,422 yen, down 3.9% in nominal terms and 3.5% in real terms year-on-year.

Labour Force Survey Monthly Results
(1) Employment

The number of employed persons in July was 64.79 million, an increase of 980,000, or 1.5%, over the same month in the previous year.

(2) Unemployment
The number of unemployed persons in July was 2.03 million, a decrease of 190,000, or 8.6%, from the same month in the previous year. The seasonally adjusted unemployment rate in July was 3.0%, down 0.1 point from the previous month. The unemployment rate for men, 3.2%, was the same as in the previous month, while that for women declined 0.3 point to 2.7%. The unemployment rate has reached its lowest level since May 1996.

(10,000 persons)
  July figures Change from previous year
      (%)
Population aged 15 years or over 11,081 5 0.0
Labour force 6,682 79 1.2
Employed persons 6,479 98 1.5
Employees 5,721 89 1.6
Unemployed persons 203 –19 –8.6
Not in labour force 4,391 –75 –1.7
Labour force participation rate (%) 60.3 0.7
Employment rate (%) 58.5 0.9
Unemployment rate, original series (%) 3.0 –0.4
  Current month Change from previous month
Unemployment rate, seasonally adjusted (%) 3.0 –0.1

(3) Job availability
Japan's job availability in July registered its best level since August 1991, with the ratio of job offers to jobseekers standing at 1.37, the same as the previous month. This figure means that there were 137 jobs available for every 100 jobseekers. Japan has likely achieved full employment and faces a severe labour shortage.

Consumer Prices
The consumer price index in July was 99.6 (2010 = 100), down 0.2 point from the previous month and down 0.4% from the same month of the previous year. The inflation rate remains far below the 2% target set by the Bank of Japan, which hopes to achieve that goal around the second half of the fiscal year starting April 2017.

July 2016
Index Monthly
change (%)
Annual
change (%)
All items 99.6 -0.2 –0.4
All items, less fresh food 99.6 -0.2 –0.5
All items, less food (less alcoholic beverages) and energy 100.3 -0.2 0.3
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