News ID: 194205
Published: 1150 GMT June 06, 2017

Japan wage growth returns in April

Japan wage growth returns in April

Wage growth returned to Japan in April, with a revision wiping out the contraction from the month prior and suggesting the outlook for lifting inflation may be less dire than previously thought — albeit still far from ideal.

Labor cash earnings growth rose to 0.5 percent year on year in April, up from a revised reading of no growth in March (previously a contraction of 0.4 percent) and besting a median forecast of 0.3 percent from economists surveyed by Bloomberg.

But real cash earnings, which account for inflation and often correlate with household spending, were static from a year prior in April after shrinking a revised 0.3 percent (previously contraction of 0.8 percent) in March.

Overtime pay shrank 0.2 percent, improving further from a revised dip of 0.6 percent in March (previously contraction of 1.7 percent).

Marcel Thieliant at Capital Economics said: Following an unusually weak reading in March, the rebound in wage growth in April came as no surprise. But the bigger picture is that labor cash earnings are not growing fast enough to create noticeable cost pressures.

He added, "The current pace of wage growth remains far too slow to generate any cost pressures. Output per worker has risen by 0.5 percent per annum over the last five years. Accordingly, wages would have to rise by at least 2.5 percent per annum to generate two percent inflation."

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