Data reveals that Japan experienced a significant rise in inflation-adjusted real wages in June, marking the first increase in over two years, as nominal pay also surged at the quickest rate in nearly 30 years.
This development supports the central bank’s assertion that wage growth is becoming more widespread.
Meanwhile, household spending declined more than anticipated in the same month, casting uncertainty on the Bank of Japan’s strategy to gradually elevate interest rates. The recent market turbulence, following the BOJ’s decision to raise interest rates last week, is speculated to potentially dampen consumer sentiment.
In June, real wages grew by 1.1%, breaking a 27-month streak of decline, while nominal wages, reflecting the average total cash earnings per worker, spiked by 4.5% to 498,884 yen ($3,480) – the fastest growth rate since January 1997.
The rise in regular pay for permanent employees by 2.7% indicates that generous pay raises offered during this year’s wage negotiations are bolstering household income.
Nevertheless, household spending saw a 1.4% drop in June compared to the previous year, exceeding the market forecast of a 0.9% decrease. This suggests that the increasing cost of living may be deterring consumers from increasing their expenditure.
