Japan workers' wages rise in positive sign for consumer spending

[TOKYO] Wages of Japanese workers rose in August from a year earlier, reversing from the previous month's decline, in a sign of a gradual pick-up in workers' income amid a tightening labour market.

Wages rose in both nominal and inflation-adjusted real terms, labour ministry data showed on Friday.

The data is likely to ease some worry over the sustainability of a recent improvement in consumer spending.

Still, wage growth may not be strong enough to dispel questions over the central bank's assertions that a tightening labour market will eventually lead to higher wages, which will boost economic activity and inflation.

Wage earners' nominal cash earnings rose an annual 0.9 per cent in the year to August, reversing from the prior month's revised 0.6 per cent decline and the fastest gain since July 2016, the data showed.

Reflecting a 0.8 per cent rise in consumer prices, however, inflation-adjusted real wages rose a meagre 0.1 per cent, up for the first time in eight months.

Many Japanese companies remain hesitant to spend their record cash piles on raising wages, in part because they are unable to pass on costs to their customers who are accustomed to nearly two decades of mostly falling prices.

Special payments - which include summer bonuses - jumped 6.1 per cent in August from a year ago, the biggest gain since March 2016.

Regular pay, which determines base wages, rose 0.4 per cent in the year to August, rising for a fifth straight month.

Overtime pay, a barometer of strength in corporate activity, rose 1.5 per cent year-on-year in August, up two months in a row.

REUTERS