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Japan jobs, household spending hint at pick up in domestic demand

Female job seekers look at maps of a job fair held for fresh graduates in Tokyo, Japan, March 20, 2016. REUTERS/Yuya Shino/File Photo

By Stanley White

TOKYO (Reuters) - Japan's unemployment rate in October held steady as the availability of jobs improved and household spending fell at a slower pace, a tentative sign that a robust labour market is lending support to domestic demand.

The seasonally adjusted unemployment rate in October was 3.0 percent, unchanged from the previous month and in line with economists' median estimate, data showed on Tuesday. Job availability rose to the highest since August 1991.

Household spending fell 0.4 percent in October from a year earlier, less than the median estimate for a 0.6 percent annual decline, as shoppers spent less on food and transport.

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The data suggests that Japan's domestic demand could stabilise, which could ease policymakers' concerns and reduce the need for stimulus to energise the economy and encourage inflation.

Japan's unemployment rate has been falling partly due to its shrinking labour force and a shortage of workers in construction, healthcare and hospitality.

The jobs-to-applicants ratio rose to 1.40 from 1.38 in the previous month to reach the highest level since August 1991, separate data showed on Tuesday. The median estimate was for the ratio to rise to 1.39.

Household spending has been falling since March as lacklustre gains in real wages and worries about how the Bank of Japan's negative interest rate policy would affect the pension system turned some consumers even more cautious, economists say.

Data on Tuesday showed consumers did increase spending on domestic travel and furniture in October, offering tentative signs that spending overall is bottoming out.

Signs that the pace of decline in household spending is easing would be welcome for Japan's fragile economic outlook.

Japan's economy expanded for a third straight quarter in July-September as exports recovered, but domestic activity remained weak. Other data has shown consistent declines in consumer prices, another warning sign that domestic demand lacks momentum.

(Reporting by Stanley White; Editing by Eric Meijer)