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How Japan's Unemployment Rate Dropped Even As 280,000 People Lost Their Jobs

Tyler Durden's picture




 

Back in August 2010, Zero Hedge was ostracized for daring to first point out the massive distortion to the US unemployment rate as a result of the collapse in the labor force participation rate, and the far less realistic modeling of the US labor force. We said that while the US unemployment rate was shown to be steadily declining, the real unemployment rate when one factors in a realistic participation rate is well above 10%. It still is.

Since then not only tenured Wall Street weathermen but Janet Yellen herself has admitted the unemployment rate is no longer a meaningful estimation of slack in the US economy, in other words it is a purely propaganda data point that serves a political purpose (look how strong the economy is) to boost confidence, and no other.

So now that Japan has decided to follow in US footsteps and aggressively devalue its way to prosperity and a Keynesian utopia, Abe will need to adopt every trick in the BLS book to survive even as the Japanese economy is crashing and burning, courtesy of the plunging Yen which however is boosting the "wealth effect" for a small but powerful and wealthy portion of the population, and is thus tolerated.

And so it has.

Yesterday Japan amazed everyone when it reported that its unemployment rate had dropped yet again, this time to 3.3%, the lowest since April 1997.

The paradox is that while the number of Japan's unemployed dropped by 20,000, the number of those employed plunged by 280,000! Or as Goldman calls, it "growth in jobholders looks to have peaked amid a lack of recovery momentum in the economy"

But how can that result in a lower unemployment rate? Simple. The answer is shown on the chart below.

 

And there you have it, :BLS labor data fudge 101.

Japan's labor "statistics" office just crashed the labor force, in this case by 340,000 in one month (following a drop of 190,000 in March and 20,000 in February) in order to push the unemployment rate lower as 280,000 people lost their jobs.

But one doesn't need to even dig that deep to figure out just how cooked Japan's books are. As the FT noted overnight:

The figures highlight a crucial paradox in Japan’s economy: even as the labour market tightens, workers are not extracting pay rises. The Bank of Japan is relying on wage increases to boost consumption and create a virtuous circle of higher inflation.

Indeed, alongside the employment data Japan also reported household spending which once again dropped, wildly missing expectations of a 2.8% increase, and confirming that Abenomics is the worst thing that could have happened to Japan's economy. Goldman has the breakdown:

Household spending falls again after a rebound in March; consumption remains weak:

 

Based on the Household Survey, real consumer spending fell 1.3% yoy, coming in well below the market consensus for +2.8%. However, this is partly due to non-consumption spending items that should essentially not be included in consumption, such as money gifts. Core consumption, which excludes such items, rose 1.4% yoy. We believe this suggests that consumption recovery is still weak, given core consumption in April 2014 was at a slump at -6.6% yoy. Even on a seasonally adjusted mom basis, real consumption spending and real core consumption fell 5.5% and 3.5%, respectively, suggesting that the consumption recovery in March (+2.4% and +2.8%, respectively) was a one-off event. Core consumption fell to the average level seen in Apr-Jun 2014, a period right after the consumption tax hike.

 

Real disposable income remains sluggish: Real disposable income of workers’ households rose 0.1% mom in April, coming in broadly flat mom (March: -0.9%). While we cannot determine the trend based on the March figure alone given that real disposable income fluctuates significantly every month, the figure has been sluggish since end-2014.

 

So what is really going on in Japan and how does one explain the complete lack of an increase in either spending or wages, yet coupled with a 3.3% unemployment rate? Well, as noted above, the unemployment rate is a fabricated, statistica gimmick, goalseeked to "confirm" that Abenomics is working, when in reality it isn't, and is merely nudging the denominator in the employment rate calculation.

But the real answer is the following. Just like in the US, all of Japan's recent "hiring" has been of part-time workers at the expense of full-time jobs, leading to increasing wage slack...

... and not only that, but just like in the US, focusing primarily on senior citizens and housewives.

 

And that is how you stage and fabricate a "recovery" right in front of everyone's eyes: a Copperfieldian sleight of hand which works only as long as everyone is perfectly happy to be lied to by their government.

Source: Japan Statistics Bureau

 

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Fri, 05/29/2015 - 08:20 | 6143205 junction
junction's picture

Those Japanese copycats, copying Obama's game plan.

Fri, 05/29/2015 - 08:40 | 6143255 ShorTed
ShorTed's picture

Seriously, how BAD do things have to be to make you want to copy the lies and deceit of the U.S. gov't?

Fri, 05/29/2015 - 08:46 | 6143265 Richard Chesler
Richard Chesler's picture

Obongo's greatest export: fraud and chicanery.

 

Fri, 05/29/2015 - 12:16 | 6144029 malek
malek's picture

Guys and Gals, don't you get it?

Japan is copying the successful deceits of the US' BLS.
After all, how many people in the US seriously and openly question the lying "unemployment" numbers?

Fri, 05/29/2015 - 08:21 | 6143207 Atomizer
Atomizer's picture
The Inner World of Finance

http://m.youtube.com/watch?v=yv9UBILnbbg

Fri, 05/29/2015 - 08:22 | 6143212 CHC
CHC's picture

Wait a minute.  If our BLS can fudge numbers then why can't Japan?  I mean, seriously?!

Fri, 05/29/2015 - 08:28 | 6143234 NoDebt
NoDebt's picture

You're right.  Fair's fair.

I find it most interesting that all the "developed" economies of the world have almost the same basic problems (demographics, debt, etc) and they all rely on the same fudging tactics.  Little lemmings all following eachother off the cliff.

Fri, 05/29/2015 - 09:25 | 6143353 fleur de lis
fleur de lis's picture

That's because as each developed country gets lured and trapped into the NWO rat pit they have to follow the same financial script that benefits the same borderless vermin at the expense of the feckless general population. This is inversely related to a loss of cultural identity, along with time tested methods of money management that served each nation and culture uniquely according to its own development.

Fri, 05/29/2015 - 08:52 | 6143284 Dubaibanker
Dubaibanker's picture

In Malaysia, their airline laid off 6,000 people last year and about 8,000 this week onwards.

In Ireland, thousands of job cuts are expected at Aer Lingus.

In India, Axis Bank as well as ICICI Bank, amongst the Top 6 banks in India, have fired thousands in the last 1 year.

In US, JP Morgan is said to fire ANOTHER 5,000.

In Austria, a bank born in 1840, Volksbank, decided to wind down yesterday.

But...the unemployment rate....it keeps declining!!! LOL

After all...it is a LOVELY DAY! https://www.youtube.com/watch?v=sU4mDyj8DSI

Fri, 05/29/2015 - 09:32 | 6143422 Stormtrooper
Stormtrooper's picture

Little known fact. Japan has been sub-contracting BLS to calculate their unemployment statistics. Best to leave that kind of work to the pros.

Fri, 05/29/2015 - 08:24 | 6143220 ClassicCommodity
ClassicCommodity's picture

Those slit eyed gooks, when will they learn.

Fri, 05/29/2015 - 08:34 | 6143246 Headbanger
Headbanger's picture

Japs aren't gooks you idiot.

Fri, 05/29/2015 - 08:40 | 6143256 ClassicCommodity
ClassicCommodity's picture

Nips.. Gooks... same same

Fri, 05/29/2015 - 08:25 | 6143225 Rainman
Rainman's picture

Another bankster jumps

                     http://nypost.com/2015/05/28/man-falls-to-death-outside-luxury-building/

Fri, 05/29/2015 - 08:27 | 6143232 CarpetShag
CarpetShag's picture

Flying lessons getting cheaper

Fri, 05/29/2015 - 09:24 | 6143393 fleur de lis
fleur de lis's picture

He was probably in possesion of information that was of interest to several parties, not necessarily on the same side. Or maybe a material witness. Either way, the psychopaths felt threatend and reacted, knowing that they could get away with it.

Fri, 05/29/2015 - 08:25 | 6143226 BobRocket
BobRocket's picture

Children born in the post war baby boom are reaching retirement age, 1960 to 1975 saw large numbers enter the workforce, now they are leaving.

 

 

Fri, 05/29/2015 - 08:31 | 6143242 d edwards
d edwards's picture

Japan must use the same system as0baMao.

Fri, 05/29/2015 - 12:49 | 6144168 franciscopendergrass
franciscopendergrass's picture

Sans welfare state, automation and central bank madness, shouldn't that mean more jobs?

Fri, 05/29/2015 - 08:26 | 6143227 CarpetShag
Fri, 05/29/2015 - 08:37 | 6143248 Dr. Engali
Dr. Engali's picture

Well japan is a vassel state of the U.S, so it stands to reason they would copy our make the data up as we go along procedures.

Fri, 05/29/2015 - 08:38 | 6143250 Oldwood
Oldwood's picture

It appears that our only salvation is to not look. Ignorance is our only bliss. Go out and buy a new car...or better yet, a house! Everything will be paid for in the future...a future that no one dares to look at. Blinders may be called for to ensure only the proper visual and auditory inputs reach our brains.

http://www.amazon.com/Portable-Eyewear-72-Inch-Widescreen-Multimedia/dp/...

Fri, 05/29/2015 - 08:39 | 6143254 j0nx
j0nx's picture

These numbers will all fall in line in about 10 years when 25% of their population has cancer. Dead culture folks. The longer they fail to take the Russian steps to deal with Fuku the worse it will be for them.

Fri, 05/29/2015 - 09:36 | 6143438 fleur de lis
fleur de lis's picture

What are the Russian steps?

Fri, 05/29/2015 - 10:18 | 6143597 j0nx
j0nx's picture

Sending men in by the hundred and thousands to deal with it. Not burying their heads in the sand and wishing it away. Russians did the shit that needed to be done to clean their shitpile up. The Japanese, not so much and they will pay for it within 10 years mark my words. Them and everyone else most likely.

Sat, 05/30/2015 - 14:20 | 6147123 fleur de lis
fleur de lis's picture

Thanks for the explanation. Yes, the Russians are very tough, always have been, show no signs of letting up, and for some reason have always been underestimated by the West. The East is not so foolish. It does not surprise me then, that the Russians would rush headlong into the threat in order to neutralize it. 

Fri, 05/29/2015 - 08:41 | 6143259 buzzsaw99
buzzsaw99's picture

so MOAR then?

Fri, 05/29/2015 - 08:48 | 6143270 yogibear
yogibear's picture

Everyone is catching on to the BLS's unemployment math.

See, unemployed doesn't mean be being unemployed. Either your retired or discouraged so you don't count as being unemployed.

If the US cut unemployment insurance from 26 weeks to 3 weeks we would have a lot less unemployed people.

They would all fall off the unemployment stats.

 

 

Fri, 05/29/2015 - 09:52 | 6143502 Bob
Bob's picture

Michigan cut UIC from 26 to 20 weeks max a couple years ago and Lo and Behold! unemployment has fallen just as you say!

Genius!

Best to do it in states that have legalized marijuana or have "medical" marijuana programs, though, I'm thinking.  It's hard for hopeless young people to make the successful transformation to couch potatoes without weed or alcohol . . .

Fri, 05/29/2015 - 08:50 | 6143278 NoWayJose
NoWayJose's picture

I suppose the headline "unemployment rate falls" is preferable to "260,000 die from Fukushima radiation". Only governments can make 260,000 workers 'disappear'!

Fri, 05/29/2015 - 08:57 | 6143299 Fun Facts
Fun Facts's picture

Using the BL[B]S model.

Fri, 05/29/2015 - 09:14 | 6143362 Atomizer
Atomizer's picture

Watch my above link above. Quants. 

Fri, 05/29/2015 - 09:39 | 6143445 SillySalesmanQu...
SillySalesmanQuestion's picture

I'll call that bullshit and raise you two farces...

Fri, 05/29/2015 - 09:54 | 6143516 Mirv
Mirv's picture

The number of young people in Japan and the number of people below 55 years old is plummeting by about 1 million per year. Of course  the number of employed and the unenployment rate can be both dropping.  see for example http://en.wikipedia.org/wiki/Demographics_of_Japan This "news" article and the conclusory and sarcastic comments are stupid and misleading. 

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