Japan employment situation to strengthen in 2015

Japan's unemployment rate is expected to improve to 3.5% in February (from 3.6% in January). Both the manufacturing and non-manufacturing sectors are now making the necessary increases in hiring. 

Many workers who had previously dropped out of the labour force have returned to work as the number of employees has increased. In January, the unemploymentrate rose to 3.4% from 3.6% in December. However, looking in further detail at the number of decimal places, the rate in December was actually 3.55%. 

"In February, we expect the unemployment rate to improve back to 3.5% which corresponds to the NAIRU level. Many companies are starting to increase hiring. The unemployment rate should therefore fall below the NAIRU level of 3.5% in 2015, which will underpin today's sentiment that the expansion of aggregate wages is allowing Japan to make a full exit from deflation. The job-to-applicant ratio is likely to reach 1.15 in February (was 1.14 in January)", said Societe Generale in a report on Thursday.