The jump in Japan’s unemployment rate from 4.4% to 4.8% in March (consensus 4.6%) removes some of the shine from yesterday’s better manufacturing data. What’s more, unemployment has much further to rise. During the last economic cycle the unemployment rate peaked at 5.5% (in 2003). The number of job vacancies per applicant at government-run employment agencies has already fallen to 0.52, just a whisker above the previous cyclical low of 0.50 (in 2002), and the downward trend in this indicator shows no sign of slowing. The peak for the unemployment rate in the wake of the current (much more severe) recession is therefore likely to be nearer 6.0%. (See Chart 1.)
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