MNI DATA IMPACT: Japan Labor Market Worsens In July

Japan's seasonally adjusted average unemployment rate rose to 2.9% in July from 2.8% in June, despite an increase in those employed, as the number of job seekers increased as economic activities resumed, data released by the Ministry of Internal Affairs and Communications released Tuesday showed.

July's 2.9% matched May's 2.9%, which was the highest level seen since February 2017.

The total number of employed rose 110,000 (+0.2%) m/m in July vs. a rise of 80,000 (+0.1%) in June, while the number of unemployed rose 20,000 (+1.0%) from the previous month after falling 30,000 (-1.5%) in June.

The job-to-applicant ratio fell to 1.08 in July from 1.11 in June, the lowest level in six years and three months, indicating unemployment rate is expected to rise further in the coming months, according to data released by the Ministry of Health, Labour and Welfare.

The government on Friday decided to extend the Employment Adjustment Subsidy Fund to support employment. The number of bankruptcies and resulting job losses have been minimized to date due to measures to support corporate financing taken by the Bank of Japan and the government. However, some companies continue to see sluggish profits or sales in the wake of social distancing.

BOJ economists are watching developments in the labour market closely, as the levels of tightness is a main pillar of its economic assessment.