Japan's inflation-adjusted, ie real, wages fell in May for a record 26th straight month, down 1.4% y/y
- April was -1.2%
- falling after inflation wages is dampening household spending, which in turn is making the BoJ's efforts to normalise monetary policy uncertain
- weak yen and higher commodity prices pushed up the cost of imports
There are some better data points in the release.
Base pay +2.5% y/y in May
- best since January 1993
Nominal wages, average total cash earnings per worker, +1.9% y/y
- prior +1.6%
- best in 11 months
Overtime pay +2.3% y/y
- first increase in six months
In Japan, seven out of 10 workers are employed by small firms. These firms are facing difficulties passing on rising costs to their clients. While wage rises at firms with 30 or more employees outpaced inflation for the first time in 26 months, at very small firms with five or more workers, pay hikes still lagged inflation.
