Japan’s wages surge in July as real pay rises for first time since December - recap

Japan data earlier:

• Japan July data. Real wages +0.5% y/y. Household spending +1.4% y/y (exp 2.3%)

Boosting the prospect of a Bank of Japan rate hike:

• ING flags October BoJ hike on rising pay, sees politics and tariffs as key risks

Japan’s nominal wages rose 4.1% in July from a year earlier, accelerating from June’s revised 3.1% gain and beating economists’ 3% forecast, according to labour ministry data released Friday. It was the strongest increase since December.

Real cash earnings also turned positive for the first time in seven months, climbing 0.5% versus expectations for a 0.6% decline.

• “The results of this survey show that the domestic economy is at least positive,” said Kohei Okazaki, chief market economist at Nomura Securities.
• “This increases confidence that domestic demand will remain solid even if some external shocks occur going forward.”
• “Even if some of the increase is due to bonuses, the fact is that incomes are increasing,” Okazaki said. “I think we are beginning to see signs of wages increasing, albeit gradually, and linking this to consumption.”