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

Reuters

Published Nov 07, 2019 23:35

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

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.