Japan's labor market showed further signs of tightening in December, driven by labor shortages. This trend is attracting a lot of attention at a time when companies are negotiating annual wages with labor unions.
Japan's Ministry of Internal Affairs announced on Tuesday (January 30) that the unemployment rate fell to 24, the lowest level in January this year.
While another indicator shows a slight weakening in labor demand, the labor market remains at its tightest level in years. The Ministry of Health, Labor and Welfare reported that the job-to-job ratio increased from 128 fell slightly to 127, economists expected to be flat.
The Bank of Japan is keeping a close eye on the labor market for evidence of a virtuous circle between wages** and demand-driven prices**. In its quarterly outlook last week, the Bank of Japan said that "the growth rate of regular cash income is likely to continue to rise steadily, given the continued tightness of prices** and labor market conditions".
Bloomberg economist Taro Kimura said in a note: "Looking ahead, we expect the labor market to continue to tighten gradually. Manufacturers are likely to continue to hire aggressively, with retailers and other service companies also increasing hiring as slowing inflation stimulates consumer demand. ”