Let me elaborate on these two points. The output gap and prices First, on the output gap. The current recovery has been led by domestic demand, and business conditions in nonmanufacturing in particular have been improving. As domestic demand tends to have large stimulative effects on employment, this has led to a further tightening in labor market conditions.
For example, the unemployment rate is approaching the structural unemployment rate and the active job openings-to-applicants ratio is now at the same level as the peak reached before the global financial crisis (Chart 5). The employment conditions DI in the Bank’s Tankan survey revealed that more and more firms feel that there is a labor shortage.