Economic and Labor Situation in Japan, May 2026

The 97th Central May Day Rally was held under the slogan: “Building a peaceful future full of smiles through dialogue and solidarity—toward a society where people can live in security through genuine work-style reform.”

In her opening address, RENGO President Tomoko Yoshino presented a detailed report on the outcomes of the 2026 spring labor-management wage negotiations (Shunto). She emphasized that, according to Rengo’s fourth round of aggregated responses, the average wage increase had reached 5.08%, marking the third consecutive year of increases exceeding 5%. At the same time, she noted that real wages have yet to firmly enter positive territory and called for the continued implementation of base pay hikes that reliably outpace inflation. She further advocated for work-style reforms that properly reward the value of labor—pointing to workplace environments in which wages rise, employees can take leave, and people can have hope for the future, rather than relying on long working hours. Yoshino also strongly criticized moves toward deregulating working hours, calling them “unnecessary” and “a bad joke,” and expressed concern about prolonged working hours without a solid basis in productivity improvements.

Prime Minister Sanae Takaichi attended the Rengo Central May Day Rally and delivered remarks as a representative of the government. She praised the results of the spring wage negotiations as “the product of sincere efforts by both labor and management” and affirmed that “the government will make every effort to create an environment conducive to wage increases.” As part of measures to address rising prices, she cited efforts to maintain gasoline prices and to ease the burden of taxes and social insurance premiums, expressing the government’s commitment to achieving sustained wage growth that exceeds inflation. The Prime Minister also stressed the importance of extending wage increases to small and medium-sized enterprises and regional economies, encouraging application of the Act on Promoting Fair Transactions. She did not mention expansion of the discretionary labor system, a stance seen as reflecting consideration for RENGO’s concerns. Minister of Health, Labour and Welfare Kenichiro Ueno and Tokyo Governor Yuriko Koike also attended the event as guests and delivered remarks.

Labor Force Survey Monthly Results¹
(1) The number of employed persons in March 2026 was 67.73 million, an increase of 30,000 over the same month the previous year. By gender, this included 36.76 million men, down 80,000, and 30.97 million women, up 110,000 over the previous year.

(2) Unemployment
The number of unemployed persons in March was 1.94 million, up 140,000 over the same month in the previous year.
The seasonally adjusted unemployment rate in March was 2.7%, up 0.1 points, increasing for the first time in two months. The unemployment rate was 2.9% for men, up 0.1 points, and 2.4% for women, unchanged from the previous month.

Units: 10,000 persons

Average unemployment rate in fiscal 2025 rose 0.1 percentage point from a year earlier to 2.6%, deteriorating for the first time in five years, as more people who were not previously working were counted as unemployed after starting to look for jobs.

(3) Job Availability
Japan’s job availability in March stood at 1.18, down 0.01 from the previous month. This ratio means there were 118 job openings for every 100 job seekers.
The ratio of regular employee job offers to applicants was 0.99, unchanged from the previous month.
The ratio of new job offers to applicants, a leading indicator for the labor market, was 2.15, up 0.05 over the previous month. The number of new job offers decreased 2.6% from the same month the previous year. By industry, new job offers fell 15.8% in the information and communications sector, 6.5% in the wholesale and retail sector, and 6.4% in the hotel and restaurant sector.
Job availability in fiscal 2025 was 1.20, down 0.05 points from 1.25 in the previous fiscal year. The average number of active job openings in fiscal 2025 decreased by 4.1% compared to the previous year, while the number of active job seekers decreased by 0.7%.

Industrial Production 2

Industrial Production Fluctuates Indecisively
Industrial output in March decreased 0.5% from the previous month, marking the second consecutive month of decline. The decrease was largely due to reduced output in the chemical industry, including products such as polyethylene made from naphtha.
Production, shipments, inventory, and inventory ratio all decreased. The industries that mainly contributed to this decrease were as follows: (1) inorganic and organic chemicals; (2) general-purpose and business oriented machinery; and (3) petroleum and coal products, in that order.
According to the Survey of Production Forecasts in Manufacturing, production was expected to increase 2.1% in April and 2.2% in May.

March  2026           2020 average = 100

Family Income and Expenditure Survey 3

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 March was 334,701 yen, down 1.3% in nominal terms and down 2.9% in real terms from the previous year.

(2) Income and Expenditures for Workers’ Households
Average monthly income per household stood at 557,663 yen, up 6.4% in nominal terms and up 4.7% in real terms from the previous year. The average level of consumption expenditure was 374,892 yen per month, down 2.1% in nominal terms and down 3.6% in real terms year-on-year.

Consumer Prices 4

The consumer price index (CPI) in March was 112.7 (2020 = 100), up 1.5% over the previous year and up 0.4% over the previous month, the slowest rise in two years, with the abolition of a provisional gasoline tax contributing to the deceleration. Core inflation (CPI less food and energy) was up 2.4% over the previous year and up 0.2% over the previous month, largely reflecting the government’s subsidy program to curb electricity bills from January to March.
Food prices, excluding fresh items, climbed 5.2% over the previous year in March, driven by surging costs for items such as chocolate, and coffee beans. Energy costs fell 5.7% after a drop of 9.1% in February, with gasoline plunging 5.4% from the year before. Japan’s provisional gasoline tax was scrapped on Dec. 31 as the government sought to ease the burden on households hit by persistent inflation.

March 2026

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