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No.236 (2017/5/23)
Economic and Labour Situation in Japan (May 2017)
The 2017 Spring Struggle

On April 13 RENGO (Japanese Trade Union Confederation) carried out its fourth tally of wage hike settlements reached in the 2017 Spring Struggle for a Better Life. RENGO's survey revealed that 3,039 unions that had demanded average wage hikes for members and engaged in labour-management negotiations had reached settlements by that time. The average wage hike in these settlements (including the regular wage hike) was 5,940 yen, the equivalent of 2.02% of the average wage before the hike. This figure was 137 yen, and 0.04 percentage points, less than at the same stage last year.

Of unions with fewer than 300 members, 2,007 unions had extracted settlements. The average wage hike in these settlements (including the regular wage hike) was 4,674 yen, the equivalent of 1.89% of the average wage before the hike. The average wage hike of union members in companies with more than 1,000 employees was 6,237 yen, the equivalent of 2.04% of the average wage before the hike.

The negotiations of small and medium-sized unions will continue until May.

Bank of Japan Forecasts Moderate Expansion
The Bank of Japan made a small increase to its growth forecasts for this fiscal year and next in its April 26-27 policy meeting. It was the first time for the word "expansion" to be used in this context in about nine years. Exports and industrial output are on an upward trend, according to the BOJ. However, the bank's statement also said that risks to both prices and economic activity were "skewed to the downside" and that momentum toward the 2% inflation target was not yet sufficiently firm. BOJ Governor Haruhiko Kuroda said that the accommodative policy and asset purchases will continue for some time, because inflation is "quite sluggish."

Industrial Production
The industrial production preliminary report for March showed movement to be picking up. Although production and shipments decreased from the previous month, inventories and inventory ratio increased.

2010 average=100
  Seasonally adjusted index Original index
  Index Change from
previous month (%)
Index Change from
previous year (%)
Production 99.6 -2.1 111.8 3.3
Shipments 98.1 -1.1 113.6 3.2
Inventories 109.8 1.6 102.0 -3.9
Inventory ratio 111.9 0.5 94.3 -4.7

Industries that mainly contributed to the decrease were as follows: (1) general-purpose, production, and business-oriented machinery, (2) electronic parts and devices, and (3) transport equipment, in that order.

Industries that mainly contributed to the increase were as follows: (1) pulp, paper, and paper products, (2) information and communication electronics equipment, and (3) nonferrous metals, in that order.

According to the Survey of Production Forecast in Manufacturing, production was expected to increase by 8.9% in April and to decrease by 3.7% in May

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

The average monthly consumption expenditure per two-or-more-person household in March was 297,942 yen, down 1.0% in nominal terms and 1.3% in real terms year-on-year.

(2) Income and Expenditure for Workers' Households
The average monthly income per household stood at 445,607 yen, down 1.1% in nominal terms and 1.4% in real terms year-on-year. The average consumption expenditure was 337,075 yen, up 0.7% in nominal terms and 0.4% in real terms year-on-year.

Labour Force Survey Monthly Results
The unemployment rate in Japan fell to 2.8% in March 2017, the lowest rate since November 1993.

(1) Employment
The number of employed persons in March was 64.33 million, an increase of 690,000, or 1.1%, over the same month in the previous year.

(2) Unemployment
The number of unemployed persons in March was 1.88 million, a decrease of 280,000, or 13.0%, from the same month in the previous year. The seasonally adjusted unemployment rate in March was 2.8%, the same level as the previous month. The unemployment rate for men was 2.8%, down 0.2 point, while that for women was 2.7%, the same level as the previous month.

(10,000 persons)
  March figures Change from previous year
      (%)
Population aged 15 years or over 11,107 -2 0.0
Labour force 6,621 41 0.6
Employed persons 6,433 69 1.1
Employees 5,728 58 1.0
Unemployed persons 188 -28 -13.0
Not in labour force 4,479 -46 -1.0
Labour force participation rate (%) 59.6 0.4 -
Employment rate (%) 57.9 0.7 -
Unemployment rate, original series (%) 2.8 -0.5 -
  Current month Change from previous month
Unemployment rate, seasonally adjusted (%) 2.8 -0.0 -

(3) Job Availability
Japan's job availability in March was at the highest level since November 1990, with the ratio of job offers to jobseekers standing at 1.45, up 0.02 point over the previous month. This figure means that there were 145 jobs available for every 100 jobseekers. The ratio of new job offers to applicants, a leading indicator for the labour market, rose to 2.13. This figure shows that there are more than two new vacancies available for every new jobseeker. Japan has likely achieved full employment and faces a severe labour shortage.

Consumer Prices
The consumer price index in March was 99.9 (2015 = 100), up 0.2% over the same month of the previous year and down 0.1% from the previous month. The inflation rate continues to hover around zero and remains far below the 2% target set by the Bank of Japan.

March 2017
Index Annual
change (%)
Monthly
change (%)
All items 99.9 0.2 -0.1
All items, less fresh food 99.8 0.2 0.0
All items, less food (less alcoholic beverages) and energy 100.4 -0.1 -0.1
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