TOKYO (Reuters) – Japan’s government trimmed its assessment of the labor market in November for the first time in five years and also cut its view on corporate profits as slowing global growth weighs on the manufacturers.
The government left unchanged its overall assessment that the world’s third-largest economy is recovering at a moderate pace, though prolonged weakness centered mainly on exporters has remained.
The more subdued view on the employment and profit outlook for manufacturers could become a source of concern for policymakers.
“As…production activities are falling, demand for new people is somewhat slowing,” a government official told reporters.
However, the November report kept a positive overall view on the employment situation, saying it was “improving”, compared with “steadily improving” previously, the first downgrade of employment since November 2014.
Japan’s labor market remains very tight by historical standards, with the unemployment rate at 2.4% in September, close to its lowest level in 27 years. The jobs-to-applicants ratio this year was at its highest since 1974.
The government also took down a notch its view on corporate profits, largely due to weakening third-quarter profits among manufacturers, compared with the same period in the previous year.
But the government said profits were still at a high level and non-manufacturers’ profits stayed largely steady. Capital expenditure due to strong corporate profits would continue, the official said.
“I would like to make sure the employment and income situation can firmly continue to improve through economic measures,” Japanese Economy Minister Yasutoshi Nishimura told reporters at a news briefing.
Figures last week showed growth in the export-reliant economy came to a near halt in the third quarter as the prolonged U.S.-China trade war and soft global demand knocked shipments, and private consumption cooled.
The government kept its view on exports in November unchanged, saying they remained of a weak tone.
“Exports to Asia, which account for about 50% of the (total) weight, are showing weakness, and pushing down (exports) as a whole,” the official said.
Early on Friday, a private-sector survey showed Japan’s factory activity shrank for a seventh straight month in November, as domestic and export demand was depressed.
(Reporting by Daniel Leussink; Editing by Kim Coghill and Alex Richardson)