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No.237 (2017/6/9)
Economic and Labour Situation in Japan (June 2017)
Japan's Economy Growing Steadily

According to a preliminary report issued by the government, Japan's gross domestic product in the January-March period expanded by 0.5% over the previous quarter (an annualized rate of 2.2%). This marked expansion in the economy for the fifth straight quarter, a remarkable growth streak that had not happened since 2006. In annualized terms, real GDP grew by 2.2% higher than Japan's potential annual growth rate, considered to be around 0.5%. Consumer spending, which accounts for about 61% of Japan's economic output, rose by 0.4% after coming in flat in the previous quarter. Capital expenditure and housing investment both also saw positive growth. Exports grew by 2.1%, helped by renewed strength in exports to China and a weak yen. Japan's growth in the first quarter of 2017 was well balanced, supported by both domestic demand and by export demand.

Industrial Production
Industrial production in April rose by a robust 4%, renewing a post-Lehman crisis high. Production, shipments, inventories, and inventory ratio increased from the previous month.

2010 average=100
  Seasonally adjusted index Original index
  Index Change from
previous month (%)
Index Change from
previous year (%)
Production 103.8 4.0 98.2 5.7
Shipments 101.1 2.7 94.4 4.9
Inventories 111.3 1.5 105.7 -1.1
Inventory ratio 114.7 2.9 110.5 -1.1

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

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

According to the Survey of Production Forecast in Manufacturing, production was expected to decrease by 2.5% in May and to increase by 1.8% in June.

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 April was 295,929 yen, down 0.9% in nominal terms and 1.4% in real terms year-on-year.

(2) Income and Expenditure for Workers' Households
The average monthly income per household stood at 472,047 yen, down 1.7% in nominal terms and 2.2% in real terms year-on-year. The average consumption expenditure was 329,949 yen, down 2.4% in nominal terms and 2.9% in real terms year-on-year.

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

(1) Employment
The number of employed persons in April was 65.0 million, an increase of 800,000, or 1.2%, over the same month in the previous year.

(2) Unemployment
The number of unemployed persons in April was 1.97 million, a decrease of 280,000, or 12.4%, from the same month in the previous year. The seasonally adjusted unemployment rate in April was 2.8%, the same level as the previous month. The unemployment rate for men was 2.9%, up 0.1 point, while that for women was 2.6%, down 0.1 point from the previous month.

(10,000 persons)
  April figures Change from previous year
      (%)
Population aged 15 years or over 11,104 -3 0.0
Labour force 6,697 52 0.8
Employed persons 6,500 80 1.2
Employees 5,757 57 1.0
Unemployed persons 197 -28 -12.4
Not in labour force 4,397 -57 -1.3
Labour force participation rate (%) 60.3 0.5 -
Employment rate (%) 58.5 0.7 -
Unemployment rate, original series (%) 2.9 -0.5 -
  Current month Change from previous month
Unemployment rate, seasonally adjusted (%) 2.8 0.0 -

(3) Job Availability
Japan's job availability in April was at the highest level since February 1974, with the ratio of job offers to jobseekers standing at 1.48, up 0.03 point over the previous month. This figure means that there were 148 jobs available for every 100 jobseekers. The ratio of new job offers to applicants, a leading indicator for the labour market, remained buoyant at 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 April was 100.3 (2015 = 100), up 0.4% over the same month of the previous year and 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. Despite the seemingly improving economic activities in Japan in the past six months, core inflation measures remain stubbornly close to zero.

April 2017
Index Annual
change (%)
Monthly
change (%)
All items 100.3 0.4 0.1
All items, less fresh food 100.1 0.3 0.0
All items, less food (less alcoholic beverages) and energy 100.7 0.0 0.1
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