Japan – April labour market

The labour market data in April were positive, albeit more in the sense that the labour market is growing rather than necessarily tightening. That's good for aggregate earnings, but means a rise in individual pay might still be some way away.

The labour market data in April ticked almost all the right boxes: both employment and the participation rate rose, and the unemployment rate fell. The one slight disappointment was the new offers:applicants ratio. That did tick-up from March, but not by enough to lift the trend of recent months. The overall offers:applicants ratio did, however, rise, to the highest since the start of the Covid-19 pandemic. In separate data released today, there was also a clear improvement in employment confidence in the May consumer sentiment survey.

Overall, this is quite encouraging data for the economy: labour demand and supply are growing, which will be beneficial for aggregate earnings. The labour market is also tightening, but modestly, and probably not by enough just yet to push up individual earnings in any meaningful way.