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Japan wages data shows sharp and unexpected drop in February
[TOKYO] Japanese wages fell unexpectedly in February as the labour ministry adjusted the sample group used to compile the data, muddying the waters for analysts trying to get a handle on the weak state of pay in the economy.
Labour cash earnings dropped 0.8 per cent from a year ago, the ministry reported on Friday, compared with projections for them to advance 0.9 per cent. The reading for January was revised down to -0.6 per cent from 1.2 per cent.
Wages have mostly shown small gains in recent years amid a very tight labour market. They haven't risen to a level that lets households spend freely enough to boost inflation.
The Bloomberg Inflation Barometer, which draws on eight drivers of prices, points to a sharp slowing in the months ahead that may bring a spell of falling prices this summer.
Japan needs household spending to hold up this year amid weakness in exports, which is weighing on factory output and capital investment. A sales-tax hike planned for October is expected to spark a strong rise in spending in the months ahead of the increase, followed by a sharp decline.
"Abenomics' only accomplishment has been the decline in unemployment and the jobs-to-applicant ratio beating Japan's bubble period, but this hasn't spread to wages," Hiroaki Muto, chief economist at Tokai Tokyo Research Center. "At the moment we're headed towards a rise in the sales tax that isn't accompanied by a rise in wages."
Real wages, which are adjusted for inflation, fell 1.1 per cent, compared with economists' median forecast of 0.8 per cent.
The real wages figure for January was revised down to -0.7 per cent from 1.1 per cent.
Household spending rose 1.7 per cent from a year earlier, data from the ministry of internal affairs showed, versus the median estimate for an increase of 1.9 per cent.
The ministry said it doesn't see households starting to rush to spend before the sales-tax hike planned in October.