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No.244 (2017/9/11)
Economic and Labour Situation in Japan (September 2017)

Japan's Economy Expanding by Domestic Demand
According to a preliminary report issued by the government, Japan's gross domestic product in the April-June period expanded by 1.0% over the previous quarter (an annualized rate of 4.0%). This marked expansion in the economy for the sixth straight quarter, a remarkable growth streak that had not happened since 2006. In annualized terms, real GDP grew by 4.0% much higher than Japan's potential annual growth rate, considered to be around 0.5%.
The growth in the April-June quarter was largely driven by robust domestic demand. Consumer spending, which accounts for about 61% of Japan's economic output, rose by 3.7% and up 0.9% over the previous quarter. Private capital expenditure marked its highest growth since 2014 at 2.4% and investment in public sector rose 5.1% helped by additional appropriation.

Industrial Production
The industrial production preliminary report for showed movement to be picking up. While production, shipments and inventories decreased over the previous month, inventory ratio increased.
After a robust 2% quarterly growth in the April-June quarter, production decreased 0.8% from previous month. However the survey of production forecast show 6% increase for August

2010 average=100
  Seasonally adjusted index Original index
  Index Change from
previous month (%)
Index Change from
previous year (%)
Production 101.5 -0.8 103.3 4.7
Shipments 100.0 -0.7 103.4 4.1
Inventories 107.8 -1.2 110.3 -2.4
Inventory ratio 113.1 2.4 113.5 -2.6

Industries that mainly contributed to the decrease were as follows: (1) general-purpose, production and business oriented machinery (2) electrical machinery, and (3) chemicals (excluding drugs), in that order.
According to the Survey of Production Forecast was expected to increase by 6.0% in August and decrease by 3.1% in September.

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

The average monthly consumption expenditure per two-or-more-person household in July was 279,197 yen, up 0.4% in nominal terms but down 0.2% in real terms year-on-year.

(2) Income and Expenditure for Workers' Households
The average monthly income per household stood at 598,042 yen, up 4.1% in nominal terms and 3.5% in real terms year-on-year. The average consumption expenditure was 308,818 yen, up 2.1% 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 July was 65.63 million, an increase of 590,000, or 0.9%, over the same month in the previous year.

(2) Unemployment
The number of unemployed persons in July was 1.91 million, a decrease of 120,000, or 5.9%, from the same month in the previous year. The seasonally adjusted unemployment rate in July was unchanged at 2.8%, remaining at the lowest rate in 23 years. The unemployment rate for men was 3.1%, up 0.2 point, and for women 2.5%, down 0.2 point from the previous month.

(10,000 persons)
  July figures Change from previous year
Population aged 15 years or over 11,111 -3 0.0
Labour force 6,754 46 0.7
Employed persons 6,563 59 0.9
Employees 5,839 96 1.7
Unemployed persons 191 -12 -5.9
Not in labour force 4,351 -48 -1.1
Labour force participation rate (%) 60.8 0.5 -
Employment rate (%) 59.1 0.6 -
Unemployment rate, original series (%) 2.8 -0.2 -
  Current month Change from previous month
Unemployment rate, seasonally adjusted (%) 2.8 0.0 -

(3) Job Availability
Japan's job availability in July was at the highest level since February 1974, with the ratio of job offers to jobseekers standing at 1.52, up 0.01 point over the previous month. This figure means that there were 152 jobs available for every 100 jobseekers.
The ratio of new job offers to applicants, a leading indicator for the labour market, was 2.27, up 0.02 point over the previous month, very near the historical high registered in 1973. 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 July was 100.1 (2015 = 100), up 0.4% over the same month of the previous year. 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 over the past seven months, core inflation measures (CPI less food and energy) falling by 0.1% year-on-year.

July 2017
Index Annual
change (%)
change (%)
All items 100.1 0.4 0.0
All items, less fresh food 100.1 0.5 0.0
All items, less fresh food and energy 100.6 0.1 0.0
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