Japan Oct real wages turn flat, raising concern about consumer spending

[TOKYO] Japan's real wages were unchanged in October from the same period a year earlier, ending eight consecutive months of annual gains and raising concerns that sluggish consumer spending may weaken further.

Real wages, which are adjusted for moves in consumer prices, were flat in October from a year earlier, following a revised 0.8 per cent year-on-year increase in September.

Wage earners' nominal cash earnings rose 0.1 per cent year-on-year in October. Revised data showed that in the previous month nominal wages were unchanged from a year earlier.

Japanese policymakers originally hoped aggressive monetary easing and fiscal spending would spur economic growth, which would in turn push up real wages and spark inflation.

Instead, real wage growth has been subdued as many companies rely on contract workers with low salaries, while other companies have opted to hoard cash instead of using higher earnings to reward their employees, economists say.

Household spending has been falling since March, and dipped 0.4 per cent in October from a year earlier.

Special payments, such as bonuses, fell 0.5 per cent in October from a year earlier, versus a revised 3.5 per cent annual decline in September, data on Tuesday showed.

Special payments are generally small, so even a slight change in the amount can cause big percentage changes.

Regular pay, which determines base salaries, increased an annual 0.1 per cent.

Overtime pay - a barometer of strength in corporate activity - fell 1.4 per cent in October from a year ago.

REUTERS