Economic and Labor Situation in Japan, February 2026

In 2025, The Unemployment Rate Stayed at 2.5%

According to the Yearly Labor Force Survey for 2025, the average number of unemployed persons was 1.76 million, unchanged from the previous year. The average unemployment rate was 2.5%, unchanged from the previous year, reflecting a tight labor market as the number of people with jobs increased, while more joined the workforce amid inflation. By gender, the unemployment rate was 2.7% for men, unchanged from the previous year, and 2.3% for women, down 0.1 percentage points.
Despite Japan’s declining population, the number of employed individuals reached a record-high 68.28 million in 2025, marking the fifth consecutive year of growth. The labor force participation rate climbed to 62.2%, setting a new record. By gender, the participation rate for men rose by 0.2 percentage points to 69.8%, while for women, it increased by 0.9 points to 55.1%. Until 2018, labor force participation rate had remained in the 50% range, but since 2019, it has surpassed 60%. This increase has been driven primarily by the growing participation of women and seniors aged 65 and older in the labor market. In 2025, the number of employed women increased by 440,000 year-on-year to a record-high 31.26 million.
By industry, employment increased by 250,000 to 9.47 million in medical and welfare services, by 160,000 to 4.82 million in services (not elsewhere classified), and by 100,000 to 3.02 million in information and communications. On the other hand, employment declined by 160,000 to 10.29 million in wholesale and retail trade, and by 130,000 to 10.33 million in manufacturing.

By employment type, regular employment saw an increase of 120,000, while non-regular employment, including part-time, temporary, and contract workers, grew by only 20,000.

Looking at the labor force by gender, the number of men in the workforce increased by 50,000 to 38.05 million, whereas the number of women increased by 430,000 to 32.00 million. The labour force participation rate (the proportion of the labour force in the population aged 15 and over) rose by 0.5 percentage points to 63.8%, marking the fifth consecutive annual increase. By gender, the participation rate rose by 0.2 percentage points to 71.7% for men, and by 0.8 percentage points to 56.4% for women, demonstrating a consistent yearly growth in female labor participation.

Labour Force Survey Monthly Results¹

(1) The number of employed persons in December 2025 was 68.42 million, an increase of 310,000 over the same month the previous year. By gender, this included 37.07 million men, up 90,000, and 31.34 million women, up 220,000 over the previous year, marking the highest level since comparable data became available in January 1953.

(2) Unemployment
The number of unemployed persons in December 2025 was 1.66 million, up 120,000 over the same month in the previous year.
The seasonally adjusted unemployment rate in December was 2.6%, unchanged for the fifth consecutive month, marking the highest level in 16 months, as labour market conditions remained tight. The unemployment rate was 2.9% for men, unchanged, and 2.3% for women, up 0.1 points from the previous month.

Units: 10,000 persons

(3) Job Availability
Japan’s job availability in December stood at 1.19, up 0.01 over the previous month. This ratio means there were 119 job openings for every 100 job seekers.
The ratio of regular employee job offers to applicants was 0.99, up 0.01 from the previous month.
The ratio of new job offers to applicants, a leading indicator for the labor market, was 2.17, up 0.03 over the previous month. The number of new job offers decreased 2.4% from the same month the previous year. By industry, new job openings rose 4.0% in the education sector and 1.6% in manufacturing compared to one year earlier.
In contrast, new job openings fell 10.5% in information and communications and 7.0% in the hotel and restaurant sector.

Industrial Production²

Industrial Production Fluctuates Indecisively
Industrial output in December decreased 0.1% from the previous month.
Production and shipments decreased, while inventories and inventory ratio increased. The industries that mainly contributed to this decrease were as follows: (1) production machinery; (2) chemicals (excl. inorganic, organic chemicals, and medicine); and (3) pulp, paper, and paper products, in that order.
According to the Survey of Production Forecasts in Manufacturing, production was expected to increase 9.3% in January and decrease 4.3% in February.
Japan’s industrial output in 2025 grew 0.8% from the previous year, marking a rise for the first time in four years, helped by increases in the production of electronic parts and devices.

December  2025           2015 average = 100

Family Income and Expenditure Survey³

This data is a key indicator of private consumption, which accounts for more than half of Japan’s gross domestic product.
(1) Expenditure of Households of Two Persons or More
Average monthly consumption expenditure of households of two or more persons in December was 351,522 yen, down 0.3% in nominal terms and down 2.6% in real terms from the previous year.
(2) Income and Expenditures for Workers’ Households
Average monthly income per household stood at 1,207,545 yen, up 2.4% in nominal terms but the same level in real terms from the previous year. The average level of consumption expenditure was 374,127 yen per month, down 1.3% in nominal terms and down 3.6% in real terms year-on-year.

2025 Yearly Averages

Summary of Yearly Average Results

(1) Expenditures of Households of Two Persons or More
The yearly average of monthly consumption expenditures per household for 2025 was 314,001 yen, up 4.6% in nominal terms and up 0.9% in real terms from the previous year.
(2) Income and Expenditures for Workers’ Households
The yearly average of monthly income per household stood at 653,901 yen, up 2.8% in nominal terms but down 0.9% in real terms from the previous year.
The yearly average of monthly consumption expenditures per household was 346,297 yen, up 6.5% in nominal terms and up 2.7% in real terms from the previous year.

Consumer Prices⁴

The consumer price index (CPI) in December was 113.0 (2020 = 100), up 2.1% over the previous year and 0.1% over the previous month as food costs remained high. Core inflation (CPI less food and energy) was up 2.9% over the previous year and up 0.1% over the previous month. The inflation rate has remained at or above the Bank of Japan’s 2% price stability target since November 2022.
Food prices, excluding fresh items, climbed 6.7% over the previous year in December, driven by surging costs for items such as rice, chocolate, and eggs. Prices for rice, Japan’s staple food, soared 34.3% as the government reinstated its subsidies to alleviate the burden of utility bills on households between January and December.

December 2025

Japan’s index of consumer prices for in 2025 was 111.9 (2020=100), up 3.2% from the previous year.

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