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Japan real wages rise most in five months, positive sign for consumption

Japan real wages rise most in five months, positive sign for consumption
FILE PHOTO: Pedestrians walk at a scramble crossing at Shibuya shopping district in Tokyo, Japan September 15, 2017. REUTERS/Toru Hanai/File Photo   -   Copyright  Toru Hanai(Reuters)
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TOKYO (Reuters) – Japan’s real wages rose the most in five months in November, reversing from a third straight month of drops, government data showed, raising hopes for stronger domestic consumer spending to offset slowing external demand.

Labour ministry data out on Wednesday showed inflation-adjusted real wages rose 1.1 percent in November from a year earlier, following a 0.1 percent decline in October and posting the first increase in four months.

It was the biggest annual gain since June, and was due in part to a slowdown in consumer price growth, the data showed.

The wage data should provide some relief for the central bank as sluggish wage growth has kept consumers from boosting spending, hampering its efforts to stoke a virtuous growth cycle led by the private sector and generate inflation.

Despite nearly 6 years of massive monetary stimulus, tame consumer spending has kept core consumer inflation at around the half the Bank of Japan’s 2 percent price target.

Nominal cash earnings grew 2.0 percent in the year to November, accelerating from a 1.5 percent gain in October, thanks to a solid increase in regular pay and special payments, including bonuses, a labour ministry official said.

“The trend remains unchanged, with wages increasing gradually,” he said.

Regular pay, which accounts for the bulk of monthly wages, rose 1.6 percent in the year to November, posting the fastest year-on-year increase since June 1997.

One-off special payments grew 9.7 percent, the biggest gain since May, raising a hope for higher winter bonuses, which are paid during the bonus months from November to January.

Overtime pay, a barometer of strength in corporate activity, grew 1.1 percent in November, after a revised 1.7 percent gain in the previous month.

The ministry defines “workers” as 1) those employed for more than one month at a firm that employs more than five people, or 2) those employed on a daily basis or on a contract of less than one month, but had worked more than 18 days during the two months before the survey was conducted at a firm that employs more than five people.

(Reporting by Tetsushi Kajimoto; Editing by Simon Cameron-Moore)

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