Japan real wages down again after summer bonus bump, spending falls
2024.10.07 20:31
By Satoshi Sugiyama and Chang-Ran Kim
TOKYO (Reuters) – Japan’s inflation-adjusted wages fell in August after two months of increases during the summer bonus season, while household spending also declined, data showed on Tuesday, knocking chances of the central bank raising interest rates any time soon.
Real wages in the world’s fourth-largest economy fell 0.6% in August from the same month a year earlier, according to the Ministry of Health, Labour and Welfare. That came after a revised 0.3% rise in July.
Separate data showed household spending declining 1.9% from the year-earlier in August, potentially raising doubts about the strength of private consumption, which accounts for more than half of Japan’s economy.
The fall, however, was smaller than the market estimate for a 2.6% drop based on a Reuters poll, and on a seasonally adjusted basis, spending rose 2.0% from the previous month, marking the fastest pace of increase in a year.
Real wages had turned up in June for the first time in more than two years as companies bumped up summertime bonuses, though the labour ministry had said the contribution of such special payments to the data would wane from August.
Those payments rose 2.7% in August versus a revised 6.6% in July and 7.8% in June.
Sustained wage growth is a prerequisite for the Bank of Japan to raise interest rates again after its first hike in 17 years in March and a follow-up increase in July.
While the central bank said in its quarterly report on Monday that a rise in prices and wages was spreading across Japan, it also noted the concern of small and medium-sized enterprises regarding attendant pressure on profit.
Nominal wages, or the average total cash earnings per worker per month, grew 3.0% to 296,588 yen ($1,999.11) versus August last year, compared with an on-year 3.4% rise in July.
Base, or regular, pay also rose 3.0%, while overtime pay, a barometer of corporate strength, grew 2.6%.
The consumer price index officials used to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, climbed 3.5% in August, the highest rise since October last year.
($1 = 148.3600 yen)
