The economy bounced back from a downturn last year, but Singapore households have yet to enjoy the fruits of this recovery.

A Department of Statistics report released yesterday showed that overall median household income from work rose by 2 per cent in nominal terms from $8,846 a month in 2016 to $9,023 last year.

In real terms, after taking into account inflation, the increase was 1.5 per cent, even as the economy turned in a better-than-expected performance, expanding 3.5 per cent for the full year.

In contrast, the median household income went up 2.6 per cent in real terms in 2016 amid a lack-lustre economy.

Economists gave two main reasons for this.

First, inflation, which had been negative since 2014, turned positive last year. So real incomes, which were boosted by lower prices in 2016, were dented by prices creeping up last year.

Second, it is typical for wage trends to lag behind economic activity, said United Overseas Bank economist Francis Tan.

"If you are a business owner and you finally see some growth in revenue after a period of downturn, you would not immediately start handing out pay increments," he added. "You would wait until your profits grew stronger and you would expand your capacity first before thinking about rewarding your workers with wage increments or maybe even increase your headcount."

Last year's economic recovery will likely translate into stronger growth in household income only this year, he said.

Credit Suisse economist Michael Wan said that apart from economic growth, another important figure to watch is productivity growth, which will determine whether wage growth - and higher household incomes - can be sustained in the long term.

"If wage increases are not matched with productivity, a company would lose competitiveness because its efficiency is declining and yet it has to pay workers more," he said. "So for growth in wages and incomes to be sustainable, you need companies to be more efficient."

He noted that the Government has put in place various programmes and support schemes to encourage companies to be more productive.

While labour productivity grew about 3 per cent last year, the fastest pace since 2010, Mr Wan said it was likely due to a pick-up in global trade. "Last year's productivity growth was driven by external factors. Now, we need to ensure it is something that can be sustained over the long term through structural changes."