TOKYO (Reuters) – Japan’s unemployment rate rose to 2.8% as soaring coronavirus infections and mobility restrictions hit service sector activity, although a gauge of the availability of jobs hit a 21-month high in January, government data showed on Friday.
The mixed data came as companies in the world’s third-largest economy wrap up annual labor talks, while downward pressure from record coronavirus deaths and the Ukraine crisis overshadow prospects for recovery.
“The COVID-19 outbreak continued to halt economic activity in February, partly persisting into March, which is not good for the current employment situation,” said Takumi Tsunoda, senior economist at the Shinkin Central Bank Research Institute.
The seasonally adjusted unemployment rate compared with 2.7% in December, which was also the median forecast in a Reuters poll of economists.
The number of workers stood at 66.9 million in January on a seasonally adjusted basis, posting the first drop in three months, as quits due to unfavorable business conditions rose by 70,000.
The retail, education and transportation sectors have been hit hard by the Omicron variant outbreak with reinstated brakes leading to the loss of more than 100,000 jobs in each of these industries in January, compared to the same month last year.
Workers on paid leave rose by 590,000 to a five-month high of 2.49 million in January from the previous month, particularly in hospitality businesses such as restaurants and hotels.
The jobs-to-applicant ratio was 1.20 in January, Labor Department data showed, up 0.03 points from 1.17 the previous month and above a Reuters poll forecast of 1.16 .
The reading was the highest since 1.31 marked in April 2020.
A Health Ministry official said growth in job vacancies outpaced that of job seekers in January as more companies submitted posting data before nationwide COVID-19 infections hit. soar later in the month.
Going forward, service sector jobs will rebound as nationwide coronavirus infections decline, Shinkin’s Tsunoda said.
“Meanwhile, growing uncertainty about the global economy linked to the Ukraine crisis is making manufacturers wary of investing and hiring.”
(Reporting by Kantaro Komiya; Editing by Sam Holmes)
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