Japan real wages drop for 7th straight month in July

[TOKYO] Real wages in Japan adjusted for inflation fell for a seventh month in July, adding to worries whether consumer spending can be sustained while the economy wrestles with slower global growth.

Real wages slumped 0.9 per cent in July from a year earlier, labour ministry data showed on Friday, after a 0.5 per cent annual decline in June.

Monthly wage data showed nominal total cash earnings dropped 0.3 per cent in July, falling again after rising for the first time since last December the previous month.

Regular pay, which accounts for the bulk of monthly wages, gained 0.6 per cent to rise for the first time since December. One-off special payments shed 2.2 per cent in July from a year earlier, after a 1.1 per cent gain in June.

Overtime pay was 0.6 per cent higher in July from a year earlier, rebounding after slipping 1.0 per cent in June.

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. The mistake has made it more difficult to grasp the actual strength of wage growth. Japan is planning to raise its sales tax to 10 per cent from 8 per cent next month.

The last sales tax rise in April 2014 caused consumer sentiment to sour, leading to an economic downturn.

Solid domestic consumption and capital spending have helped offset the drag on the world's third-largest economy from an eight-month export slump this year.

REUTERS