Japan real wages rise for first time in 27 months in June

TOKYO – Japan’s inflation-adjusted real wages rose in June for the first time in more than two years as nominal pay gained at the fastest pace in nearly three decades, data showed, backing the central bank’s view that wage increases are broadening.

But household spending fell more than expected in the same month, clouding the outlook for the Bank of Japan’s plan to steadily raise interest rates.

The latest market rout, which came in the wake of the

Bank of Japan’s decision last week to raise interest rates,

may also dampen consumer sentiment, some analysts say.

Real wages grew 1.1 per cent in June, rising for the first time in 27 months, after a revised 1.3 per cent drop in May, data from the Labour Ministry showed on Aug 6. Nominal wages, the average total cash earnings per worker, grew 4.5 per cent, the fastest pace of growth since January 1997, to 498,884 yen (S$4,600), the data showed.

Regular pay for permanent workers rose 2.7 per cent in June after a revised 2.6 per cent gain in May, a sign the bumper pay hikes offered by firms in the 2024 wage negotiations were pushing up household income.

But separate data released on Aug 6 showed household spending fell 1.4 per cent in June from a year earlier, more than a median market forecast for a 0.9 per cent drop, suggesting that rising living costs were discouraging consumers from boosting spending. REUTERS