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Japan June nominal and real pay fall year-o-year, a blow to consumption

[TOKYO] Basic compensation for Japan's workers fell for the first time in more than a year in June due to a decline in summer bonus payments, and real wages dropped at the fastest pace in two years, threatening a recent revival in consumer spending.

Wage earners' nominal cash earnings fell an annual 0.4 per cent in June, the first decline since May 2016, labour ministry data showed on Friday.

Base compensation, which accounts for the bulk of total nominal cash earnings, rose 0.4 per cent in June from a year earlier, slower than a revised 0.5 percent annual increase in the previous month.

Real, or inflation-adjusted, wages fell an annual 0.8 per cent in June, the biggest decline since June 2015. Further declines in real wages would be a blow to hopes that consumer spending is strong enough to generate sustained inflation.

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Overtime pay, a barometer of strength in corporate activity, fell 0.2 per cent in June from a year earlier versus a revised 0.3 per cent year-on-year increase in May.

Special payments, such as bonuses, fell 1.5 per cent in June from a year ago, the first decline since January as some companies reduced the amount of bonus payments to their workers.