Japan’s Real Wages Advance for First Time in 13 Months
Summarize this article with:
Japanese workers’ wages adjusted for inflation rose for the first time in 13 months, a development that may bolster consumer sentiment and support both the Bank of Japan and the government in their pursuit of key policy goals.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Japanese workers’ wages adjusted for inflation rose for the first time in 13 months, a development that may bolster consumer sentiment and support both the Bank of Japan and the government in their pursuit of key policy goals. Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Real wages increased 1.4% from a year earlier in January, exceeding economists’ median forecast of a 0.9% gain, the labor ministry reported Monday. The gain comes after the measure fell every month in 2025, and it was the fastest increase since May 2021.Nominal wages rose 3% from the previous year, also beating analysts’ expectations. Base pay climbed 3%, the biggest increase in more than 33 years, and a more stable measure that avoids sampling problems and excludes bonuses and overtime showed full-time workers’ wages increased 2.2%.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.January’s increase in real wages largely reflects softer price pressures that month, when the nation’s key inflation gauge cooled to the slowest pace in two years as food and energy prices stabilized.
Prime Minister Sanae Takaichi’s economic measures, including utility subsidies, also helped ease the cost of living burden on households.The development will be welcomed by the BOJ. If higher wages fuel personal spending it would underpin demand-driven price pressure. Achieving a virtuous cycle linking wages, consumption and prices is a key condition that would allow the central bank to continue normalizing policy with rate increases. Takaichi also seeks to generate self-sustaining growth.BOJ Governor Kazuo Ueda said last week the bank is still rolling back the degree of easing in its settings as it pursues stable 2% inflation, adding that wages need to rise “at an appropriate pace.”Authorities are widely expected to keep the benchmark rate unchanged when they next set policy on March 19, after the US-Israeli conflict with Iran injected fresh uncertainty into the global outlook. Even so, pricing in the overnight swaps market indicates that traders see a roughly 61% chance of a move by April.Investors are also watching the outcome of this year’s wage negotiations, which will culminate later this month. Last week the nation’s largest labor federation Rengo announced that its member unions are seeking an average pay increase of 5.94%, indicating wage growth momentum is continuing.A year ago unions under Rengo demanded a 6.09% increase and ultimately secured a 5.25% raise, the largest hike in 34 years.Economists broadly expect this year’s settlements to remain elevated, with a median forecast of a 5% increase. A persistent labor shortage is a key driver. A majority of firms reported full-time worker shortages for a fourth straight year, according to a report by Teikoku Databank in February.
What Bloomberg Economics Says…The BOJ will likely read faster growth in wages “as an early signal that this year’s wage negotiations (shunto) could deliver another round of strong increases, feeding through to consumer prices and inflation expectations. We expect the BOJ to raise rates by 25 basis points in July.”— Taro Kimura, economistClick here to read full reportStrong corporate earnings may help sustain the trend. Corporate profits rose from a year earlier for five consecutive quarters in the three months through December, according to Finance Ministry data released earlier this month. Company responses so far also appear supportive. Kewpie Corp. has offered a total pay increase of about 6%, while Dai-ichi Life Holdings Inc. has promised a 7% rise.That momentum appears to extend to exporters as well, despite pressure from higher US tariffs over the past year. Automakers, including Mitsubishi Motors Corp. and Mazda Motor Corp., have already pledged wage increases matching workers’ demands ahead of other industries.—With assistance from Keiko Ujikane and Tsuyoshi Inajima.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.