This content is not available in your region

Japan September real wages rise for first time in nine months - government

Access to the comments Comments
By Reuters
Japan September real wages rise for first time in nine months - government
FILE PHOTO: A worker walks past a factory at the Keihin industrial zone in Kawasaki, Japan February 17, 2016. REUTERS/Toru Hanai   -   Copyright  Toru Hanai(Reuters)

TOKYO (Reuters) – Japan’s inflation-adjusted real wages rose in September for the first time in nine months, government data showed, offering a glimmer of hope for a recovery in consumer spending – although an Oct. 1 sales tax hike and global slowdown cloud the outlook.

The data could support the view of the government and the central bank that a tight labour market should push up wages, stoking a virtuous cycle of household income gains and pick-up in private consumption, which will in turn accelerate inflation.

More than six years of massive monetary stimulus by the Bank of Japan has failed to accelerate inflation to its elusive 2% target, as tepid wage growth and tame consumer spending have kept a lid on prices despite the tightest job market in decades.

Labour ministry data out on Friday showed real wages, a key gauge of households’ purchasing power, rose 0.6% in the year to September, up for the first time since the end of last year, as nominal wage growth outpaced consumer prices.

Nominal total cash earnings rose 0.8% in the year to September, up for the first time in three months, it showed.

A solid growth in pay for full-time workers amid a labour crunch and a 14.2% gain in special pay, including one-off bonuses, more than offset an increase in low-wage part-timers.

“Our assessment remains unchanged that wages are rising gradually. We cannot be complacent but must watch a trend over time,” a labour ministry official told Reuters.

Regular pay – or base salary, which makes up most of the total cash earnings and determines a wage trend – rose 0.5% year-on-year in September, the data showed.

Overtime pay, a barometer of strength in corporate activity, stood flat in September from a year earlier, likely reflecting the government’s “work-style reform” drive on corporate Japan to curb notorious long working-hours.

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 flaw has made it harder to gauge the actual wage trend.

(Reporting by Tetsushi Kajimoto; Editing by Alex Richardson)