It looks like the rate will stay above 70 for the rest of 2025, but the impact of tariffs can’t be held off indefinitely. A downturn in the global economy seems likely over the next six months, and that could eventually push the employment rate in OECD countries below 70.
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Why might you be wrong?
I had expected the negative effects of ongoing uncertainty around tariffs to show up by now. Maybe labor markets are holding up because of how tight they’ve become due to an aging workforce, which means it might take more than just a recession to push employment numbers down in any meaningful way.
Thing is, the detailed dynamics seem to be quite complicated and counter-intuitive: Japan GDP growth went from +0.6% in Q4-2024 to zero in Q1-2025, but the respective employment rate went up, however slightly (from 79.8 to 79.9)...
These numbers may sound marginal and in the limits of "noise", but they have been repeated somewhat magnified in the recent past: Japan had a decent growth of +1.3% in Q1-2023, with an employment rate at 78.6; two quarters later, Q3-2023 had a negative growth of -0.9%, but the employment rate went up significantly to 79.0. Q1-2024 was their 3rd consecutive quarter with negative growth (numbers at -0.9%, -0.1%, and -0.5%), but the employment rate was still climbing, by then at 79.2...! 😳
(I guess this also largely addresses @belikewater's earlier concerns about a likely turbulence ahead for the Japanese economy)
Anyway, I have compiled the latest updates above, for what it may worth...
Why do you think you're right?
It looks like the rate will stay above 70 for the rest of 2025, but the impact of tariffs can’t be held off indefinitely. A downturn in the global economy seems likely over the next six months, and that could eventually push the employment rate in OECD countries below 70.
Why might you be wrong?
I had expected the negative effects of ongoing uncertainty around tariffs to show up by now. Maybe labor markets are holding up because of how tight they’ve become due to an aging workforce, which means it might take more than just a recession to push employment numbers down in any meaningful way.
Thing is, the detailed dynamics seem to be quite complicated and counter-intuitive: Japan GDP growth went from +0.6% in Q4-2024 to zero in Q1-2025, but the respective employment rate went up, however slightly (from 79.8 to 79.9)...
These numbers may sound marginal and in the limits of "noise", but they have been repeated somewhat magnified in the recent past: Japan had a decent growth of +1.3% in Q1-2023, with an employment rate at 78.6; two quarters later, Q3-2023 had a negative growth of -0.9%, but the employment rate went up significantly to 79.0. Q1-2024 was their 3rd consecutive quarter with negative growth (numbers at -0.9%, -0.1%, and -0.5%), but the employment rate was still climbing, by then at 79.2...! 😳
(I guess this also largely addresses @belikewater's earlier concerns about a likely turbulence ahead for the Japanese economy)
Anyway, I have compiled the latest updates above, for what it may worth...