Japan's unemployment rate eased to 2.5% in April from 2.7% in March, according to government data released Friday.
The latest print was also below market expectations and marked the lowest jobless rate since July 2025.
The number of employed people rose to a seasonally adjusted 68.8 million from 68.2 million a month earlier, while the number of unemployed fell to 1.8 million from 1.9 million.
The labor market data came as Japan's key inflation gauge showed signs of easing.
Core consumer prices, which exclude fresh food, rose 1.4% in April from a year earlier, the slowest pace in four years and below economists' expectations.
The softer inflation reading was partly attributed to government measures to ease cost-of-living pressures, including energy subsidies, and could complicate expectations for a near-term Bank of Japan rate hike.
"This data leaves room for debate whether there is a pressing need for the BOJ to raise rates soon," Taro Saito, head of economic research at NLI Research Institute, was quoted as saying by Bloomberg News.
"Of course, you can argue that a real rate is too low, so more hikes are justified," he added.
Meanwhile, Bank of Japan Governor Kazuo Ueda earlier this week cautioned against drawing simple conclusions from the recent surge in energy prices, saying the inflationary impact would depend on a range of factors beyond oil costs alone.
"Central banks should not look at oil prices in isolation. The same oil price increase can have very different effects depending on wages, expectations, demand, and exchange rates," Ueda said.
Ueda stopped short of signaling the timing of the central bank's next policy move, even as policymakers have become increasingly concerned about higher crude oil prices stemming from tensions in the Middle East and their potential impact on inflation.
"Looking ahead, higher oil prices will likely ripple through a broad range of items, keeping the Bank of Japan on guard against inflation overshoots. We still expect the BOJ to raise its policy rate to 1% in June," Taro Kimura said, according to Bloomberg.
