Japan’s Internal Affairs and Communications Ministry will release June unemployment data today. Unemployment in Japan, which reached 2.9% in May,
Japan’s Internal Affairs and Communications Ministry will release June unemployment data today. Unemployment in Japan, which reached 2.9% in May, is expected to increase marginally to 3.0%.
Despite a successful outbreak response and cultural predisposition towards the avoidance of layoffs, Japan’s marked reductions in basic and overtime wages as well as retail sales—down 7.9% year-on-year in May—reflect a challenging outlook. Retail is only projected to recover in 2021, provided that spread of COVID-19 continues to be ameliorated and the Olympics are held in July 2021. Regardless, Japan’s Purchasing Managers Index (PMI) reflects trends seen in Europe and the US, increasing from 26.5 to 45.0 in June and indicating an arrest in the economy’s rate of decline.
The cessation of Japan’s state of emergency has encouraged the slow resumption of economic activity. The government has also shelled out provisions and benefits to assist Japanese companies in their overseas relocation efforts. Moreover, government payments have also helped companies shift approximately 6 million workers to paid furlough schemes, effectively tethering 9% of the workforce. Once funding for those schemes end, which is likely in the fourth quarter, unemployment is likely to increase to 4%-6%.
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