The unemployment rate improved to 3.6 percent in February from 3.7 percent the previous month, government data showed Friday, indicating that the expansion in corporate profits has prompted companies to hire more workers on the back of the nascent economic recovery.

The figure is the lowest since July 2007, before the collapse of U.S. investment bank Lehman Brothers Holdings Inc. in September 2008 caused the global financial crisis.

The number of unemployed people fell a seasonally adjusted 3.7 percent from a month earlier to 2.33 million, as those quitting jobs involuntarily fell 5.0 percent to 760,000, the Internal Affairs and Communications Ministry said in a preliminary report.

The number of people holding jobs rose 0.2 percent to 63.32 million.

“As the economy is in good shape, the number of employees has been steadily increasing,” a ministry official told reporters.

Separate data showed job availability improved for the 15th straight month. The ratio of employment offers to seekers rose to 1.05 in February from 1.04 in January, which means 105 positions were available for every 100 job seekers.

By industry, the medical and welfare field added 230,000 jobs and the information and communication sector added 190,000 from a year earlier, while transport and postal services cut 140,000 jobs, the ministry said.

A confident corporate sector has been driving the pickup in the labor market, and consumer spending was up prior to the sales tax hike to 8 percent next Tuesday, analysts said.

The unemployment rate could worsen down the road if the tax increase drags down the economy and weighs on corporate performance, said Takeshi Minami, chief economist at the Norinchukin Research Institute.

“Many companies are likely to take a wait-and-see attitude for about six months, but if the economy slows at a faster pace than they expect, they may start to decrease the number of their workers,” Minami said.

The economy expanded for a fifth straight quarter through the October-December period, due partly to the positive effects of economic policies centering on drastic monetary easing and massive fiscal spending, economists said.

But fears are growing that the consumption tax hike will stifle consumption and investment, choking an economy on the verge of beating nearly two decades of deflation.

The government-affiliated Japan Center for Economic Research said earlier this month that gross domestic product is forecast to plunge 4.1 percent in the April-June period, citing the average projection of 41 private-sector economists.