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No.226(2016/12/12)
Economic and Labour Situation in Japan (December 2016)

RENGO (Japanese Trade Union Confederation) held a meeting of its Central Committee on November 25 and decided its policy for the 2017 spring struggle for the betterment of livelihood (shunto). In order to realize a positive cycle of the Japanese economy, the basic policy emphasizes the raising and uplifting of wages and the correction of disparities. Specifically RENGO proposes wage demands totaling around 4%, consisting of a basic raise of around 2% plus the regular wage hike.

Industrial Production
The industrial production preliminary report for October showed signs of an increase at a moderate pace. Production and shipments increased, while inventories and inventory ratio decreased.

2010 average=100
  Seasonally adjusted index Original index
  Index Change from previous month (%) Index Change from previous year (%)
Production 98.5 0.1 98.8 -1.3
Shipments 98.5 2.2 97.1 -1.8
Inventories 118.6 -2.1 110.7 -3.0
Inventory ratio 113.9 -0.9 113.3 0.8

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

According to the Survey of Production Forecast in Manufacturing, production was expected to increase by 4.5% in November and decrease by 0.6% in December.

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

The average monthly consumption expenditure per two-or-more-person household in October was 281,961 yen, down 0.2% in nominal terms and 0.4% in real terms year-on-year. The nation’s household spending fell for the eighth straight month and poses a persistent challenge for the government’s efforts to spur growth momentum in the economy

(2) Income and Expenditure for Workers' Households
The average monthly income per household stood at 485,827 yen, up 0.1% in nominal terms and down 0.1% in real terms year-on-year. The average consumption expenditure was 305,683 yen, down 1.3% in nominal terms and 1.5% in real terms year-on-year.

Labour Force Survey Monthly Results
(1) Employment

The number of employed persons in October was 64.95 million, an increase of 630,000, or 1.0%, over the same month in the previous year. On a year-on-year basis, the health care and welfare, finance and insurance, and manufacturing sectors added jobs.

(2) Unemployment
The number of unemployed persons in October was 1.95 million, a decrease of 130,000, or 6.3%, from the same month in the previous year. The number of unemployed people dipped below the 2 million mark for the first time in over 21 years. The seasonally adjusted unemployment rate in October was 3.0%, unchanged from the previous month and the lowest rate since January 1995. The unemployment rate for men was 3.2%, down 0.1 point, while that for women was 2.7%, up 0.1 point over the previous month.

(10,000 persons)
  October figures Change from previous year
      (%)
Population aged 15 years or over 11,083 1 0.0
Labour force 6,690 50 0.8
Employed persons 6,495 63 1.0
Employees 5,793 89 1.6
Unemployed persons 195 -13 -6.3
Not in labour force 4,386 -51 -1.1
Labour force participation rate (%) 60.4 0.5 -
Employment rate (%) 58.6 0.6 -
Unemployment rate, original series (%) 2.9 -0.2 -
  Current month Change from previous month
Unemployment rate, seasonally adjusted (%) 3.0 0.0 -

(3) Job availability
Japan's job availability in October was at the highest level since August 1991, with the ratio of job offers to jobseekers standing at 1.40, up 0.02 point over the previous month. This figure means that there were 140 jobs available for every 100 jobseekers. The ratio of new job offers to applicants, a leading indicator for the labour market, rose to 2.11. Japan has likely achieved full employment and faces a severe labour shortage.

Consumer Prices
The consumer price index in October was 100.4 (2010 = 100), up 0.6% over the previous month and up 0.1% from the same month of the previous year. The inflation rate remains far below the 2% target set by the Bank of Japan, which had hoped to achieve that goal around the second half of the fiscal year starting April 2017. It looks likely to postpone the target until fiscal year 2018.

October 2016
Index Monthly
change (%)
Annual
change (%)
All items 100.4 0.6 0.1
All items, less fresh food 99.8 0.2 -0.5
All items, less food (less alcoholic beverages) and energy 100.6 0.2 0.2
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