Japan's unemployment rate holds at two-decade low in April

[TOKYO] Japan's jobless rate remained at the lowest in more than two decades last month, but household spending remained mired in a long slump.

Highlights of Data

Household spending fell 1.4 per cent in April from a year ago (forecast -0.9 per cent), following a 1.3 per cent decline in March. The unemployment rate for April was 2.8 per cent, the same as the forecast.

Key Takeaways

Private demand rebounded during the first three months of the year as Japan's economy expanded for a fifth consecutive quarter, its longest run of growth in a decade. But households have struggled, with workers receiving limited pay increases despite the tight labor market.

With private consumption accounting for almost 60 per cent of the economy, wages and consumer spending will need to gain traction before Japan's recovery becomes self-sustaining.

Economist Views

"Private consumption will likely maintain a moderate recovery in the second quarter, but the pace of growth may slow from the previous quarter," Yoshiyuki Suimon, an economist at Nomura Securities in Tokyo, said before the data were released.

"The inflation rate is edging up lately, weighing on real wages and consumer sentiment."

"There's no change to the picture that Japan's economic recovery lacks a strong driver," Mr Suimon said.

"The report would confirm that the labour supply and demand remain very tight," Yoshiki Shinke, chief economist at Dai-Ichi Life Research Institute in Tokyo, wrote in a research note before the results were released.

"Japan's economy will probably have a sixth straight quarter of growth in the April-June period," Koya Miyamae, senior economist at SMBC Nikko Securities, wrote in a note before the results were released.

"Yet there's a high possibility that the growth rate may slow in the second quarter from the strong growth in the first quarter."

The job-to-applicant ratio was 1.48 against a forecast of 1.46.

BLOOMBERG