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Japan’s Wages On the Rise: Biggest Increase in Nearly Three Decades
(Bloomberg) – Japanese workers’ nominal wages rose at their fastest rate since 1997 in December, an acceleration in gains that could fuel speculation that the central bank will consider a course change following the resignation of Governor Haruhiko Kuroda in April.
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Nominal cash earnings for Japanese workers rose 4.8% in December from a year earlier, the Labor Ministry reported on Tuesday. Big hikes in winter bonuses have pushed wage packages well beyond a 2.5% growth rate economists have estimated.
With wage developments closely linked to the possibility of a policy change at the Bank of Japan, the bigger-than-expected gain could fuel market bets on the central bank adjusting or withdrawing from its stimulus program under a new governor. Still, the jump offers only a snapshot of a month’s numbers.
Planned wages rose 1.9%, closer to the trend in non-bonus wages and well below the 3% required by the central bank and economists to support stable inflation at 2% in Japan.
Real wages also edged up for the first time since March, posting a 0.1% gain, a figure showing that wage increases in Japan are still a long way from providing households with additional purchasing power after adjusting for inflation.
Separate figures showed that household spending fell 2.1% in real terms mom in December, down 1.3% from a year earlier, indicating that price growth is weighing on consumption.
Speculation on the direction of monetary policy continues to simmer as the government prepares to nominate Kuroda’s successor later this month.
A Nikkei report on Monday said the government had approached Deputy Governor Masayoshi Amamiya to become BOJ chief. Economists and investors see Amamiya as the frontrunner that comes closest to a continuity candidate.
Government officials denied that the report was based on fact.
–Assisted by Isabel Reynolds.
(Adds household spending numbers for December)
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