### Chapter 1 Trends and features of the labour economy Section 1. Trends of general economy, employment and unemployment and working hours

After the financial crisis in the autumn of 2008, the Japanese economy bottomed out in early 2009 but turned to a rally, overcame the temporary fall due to the Great East Japan Earthquake in 2011, and has maintained the momentum. From the middle of 2012, the economy weakened due to the global slowdown following the European sovereign debt crisis. However, thanks to such factors as the stock prices rising in hope of economic policy in 2013, the confidence of households and companies have been improving and the economy had shown a sign of recovery which was driven by domestic demands. It is on the track to a slow recovery.

The improvement of corporate production activities has increased corporate profits and this positive movement is also affecting employment. The unemployment rate has fallen below 4.0% in June 2013 for the first time in four years and eight months. The ratio of active job openings to active job applicants has exceeded 1 in November 2013 for the first time in six years and one month. The unemployment rate decreased to 3.6% in the period from January to March 2014 and the jobs-to-applicants ratio increased to 1.05, which shows the steady improvement of the employment situation.

The characteristic of the present recovery phase is that the increased number of workers has significantly contributed to the increase of entire labour input compared to the past phases.

#### (Domestic demands such as consumption, etc. have led to the slow recovery of the Japanese economy.)

Trends of real GDP growth rate by demand item in Figure 1 shows an increase in private consumption in the first half of 2013, which had resulted from the improvement in consumer mind thanks to the rise in stock prices. After the second half of 2013, in the period from January to March 2014, private consumption slowed down temporarily but increased again in reaction to the last-minute demand ahead of the April 2014 increase of consumption tax. Business investment showed a sign of increase mainly in non-manufacturing industries, followed by the improvement in corporate profits. Furthermore, public demand continued to grow thanks to the effect of the economic policy.

Export in general weakened in 2013 due to the demand decrease in developing countries. On the other hand, import prices of energy-related products such as LNG increased in response to the weakening yen exchange rate, and after the second half of 2013 import had shown a recovery thanks to the growing domestic demands. This had contributed to the decrease in overseas demands (net export) after the period from July to September 2013.

## (Gradually increased production)

Production in 2013 has gradually increased. Figure 2 shows characteristics of production by industry. The production in manufacturing industries (general/production/commercial machine industry, transportation equipment industry, electrical machinery industry, electrical parts/devices industry, iron and steel industry) increased after the period from January to March 2013.

In non-manufacturing industries, the level of activity in construction industry increased due to the influence of the reconstruction demand after the Great East Japan Earthquake, increase in public investment in compliance with the economic policy and the last-minute demand ahead of the increase of consumption tax. Production in scientific research, professional and technical services including civil engineering and construction services continued to increase from early 2013 to the period from June and September. Activity levels in finance and insurance industries increased significantly from early 2013 due to the increased number of stock transactions that were led by high stock prices. As a result of the aging population, demands in medical and welfare services are increasing steadily at a high level.