Japan’s unemployment rate rose to 3.3% in November
As we saw in the previous part of this series, Japan’s household income fell in November, leading to a decrease in household spending. Along with declining income, the unemployment rate rose in Japan. According to Japan’s Ministry of Internal Affairs & Communications, the unemployment rate rose to 3.3% in November 2015, as compared to 3.1% in October 2015 and 3.5% in November 2014.
An increase in the unemployment rate severely affects the equity markets. The WisdomTree Japan Hedged Equity Fund (DXJ) and the iShares MSCI Japan ETF (EWJ) have fallen 9.4% and 3.4%, respectively, over the last month, as of December 24. Rising unemployment also negatively affects Japanese ADRs (American Depository Receipts) such as Toyota Motor Corporation (TM), Mitsubishi UFJ Financial Group (MTU), and SoftBank Group Corporation (SFTBY).
Number of employed persons stood at 63.8 million in November
In November, the number of employed persons came in at 63.8 million, an increase of 80,000, or 0.1%, from last year. The number of unemployed persons was 2.1 million, a decrease of 100,000, or 4.6%, from last year.
The labor force was virtually unchanged at 65.9 million, and the population aged 15 and over was also almost flat at 110.8 million in November.
Although new orders and production levels have increased, unemployment has risen in Japan. This indicates that manufacturers are cautious about employment. Rather than employing full-time workers, they sought to hire part-time employees or add overtime to existing employees.
While manufacturing is improving, economic sentiment is weak. To boost business confidence, the Bank of Japan kept its pledge to increase the monetary base at an annual pace of about 80 trillion yen, according to minutes from its December 2015 meeting. This may boost manufacturing confidence.
We’ll see how Japan’s housing sector is shaping up in the next part of this series.