Japan's unemployment rate held steady as expected in May, while a gauge of labor market tightness eased, defying market expectations.
The seasonally adjusted unemployment rate remained unchanged at 2.5% in May, matching the consensus forecast tracked by Investing.com.
The total number of unemployed persons grew by 20,000 to 1.85 million year over year, while the number of employed persons expanded by 520,000 to 68.9 million, according to data from the Ministry of Internal Affairs and Communications on Tuesday.
A separate release from the Ministry of Health, Labour and Welfare showed a softer picture, with the active jobs-to-applications ratio falling to 1.17 from 1.18 in the prior month.
The figure indicates that there were 117 available job openings for every 100 job seekers across the country.
The reading missed the consensus forecast of 1.18 tracked by Investing.com.
Meanwhile, the new jobs-to-applications ratio steadied at 2.11.
Effective job openings rose 0.3% month over month on a seasonally adjusted basis, easing from the 0.4% increase in April. Effective job seekers edged up 0.7%, also softer than the 0.8% gain the previous month.
New job openings contracted 8.9% year over year in May, faster than the 3.6% slump in April. The sharper decrease in new job vacancies was due to a double-digit drop in openings across lifestyle-related services and entertainment, wholesale and retail trade, accommodation and food service industries, as well as construction.
The effective job-to-applicant ratio for regular employees, which excludes part-time workers, held steady at 0.99.
The labor data arrived less than two weeks after Japan reported higher inflation figures for May.
The nationwide core consumer price index (CPI), which strips out volatile fresh food prices and is the BOJ's preferred inflation gauge, rose 1.4% year over year in May, unchanged from April's reading.
Japan's headline CPI climbed 1.5% year over year in May, faster than the 1.4% increase in April, but missing the Trading Economics forecast of 1.6%.
Real wages in Japan, meanwhile, climbed 1.9% year over year in April, according to recent government data.
The Bank of Japan recently raised its policy rate by 25 basis points to 1.0%, the highest level since 1995.
BOJ board member Naoki Tamura, speaking to business leaders in Hyogo last week, noted that the employment conditions diffusion index in the BOJ's Tankan survey, which captures companies' perceptions over labor shortages, had tightened further in recent quarters, with the all-industries reading at -38 as of March 2026.
"As a result of such labor shortages, firms may be unable to operate production facilities as they wish to, leading to a decline in capacity utilization rates," Naoki Tamura said.
In April, Japan's capacity utilization index fell 0.8% month over month, softer than the 1.2% drop the previous month, according to Ministry of Economy, Trade and Industry data earlier this month.
