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Japan real wages drop for seventh straight month in July

Japan real wages drop for seventh straight month in July
FILE PHOTO: A businessman looks outside at a office building in Tokyo's Shinjuku business district, Japan July 21, 2016. REUTERS/Toru Hanai -
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Toru Hanai(Reuters)
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TOKYO (Reuters) – Real wages in Japan adjusted for inflation fell for a seventh month in July, adding to worries whether consumer spending can be sustained while the economy wrestles with slower global growth.

Real wages slumped 0.9% in July from a year earlier, labour ministry data showed on Friday, after a 0.5% annual decline in June.

Monthly wage data showed nominal total cash earnings dropped 0.3% in July, falling again after rising for the first time since last December the previous month.

Regular pay, which accounts for the bulk of monthly wages, gained 0.6% to rise for the first time since December.

One-off special payments shed 2.2% in July from a year earlier, after a 1.1% gain in June.

Overtime pay was 0.6% higher in July from a year earlier, rebounding after slipping 1.0% in June.

Revelations this year that labour ministry officials used faulty polling methods, which forced revisions, cast doubt on the accuracy of the ministry’s wage data from 2004 to 2017.

The mistake has made it more difficult to grasp the actual strength of wage growth.

Japan is planning to raise its sales tax to 10% from 8% next month. The last sales tax rise in April 2014 caused consumer sentiment to sour, leading to an economic downturn.

Solid domestic consumption and capital spending have helped offset the drag on the world’s third-largest economy from an eight-month export slump this year.

(Reporting by Daniel Leussink; Editing by Jacqueline Wong)

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