Japan's real wages, which are adjusted for inflation, posted their first gain in 11 months in November, helped by a rise in year-end bonuses, but economists warn that wages are unlikely to keep up with general price increases, which could hurt consumption.
The wage data released on Tuesday suggests that the government still faces obstacles in generating a sustained increase in consumer spending needed to support faster economic growth. While there are signs major companies are open to raising wages at annual union negotiations, some economists worry that retailers will raise prices faster than wages, which could curb private spending in the long run.
Separate reports also released on Tuesday painted a mixed picture with consumer sentiment falling for the first time in four months but economic output exceeding capacity by the most in more than nine years. "I expect consumer prices to rise this year a little more than they did last year, so real wages could be flat," said Norio Miyagawa, senior economist at Mizuho Securities.
"Gains in consumer spending will be mild. Exports and corporate investment will continue to drive growth." Japanese wages rose 0.1 percent in November from a year earlier after adjustments for inflation, labour ministry data showed on Tuesday, marking the first increase in 11 months.
Nominal cash earnings rose 0.9 percent in November from the same period a year earlier, the largest increase in two months, labour ministry data showed. The increase in nominal earnings was due partly to an increase in winter bonus payments, according to a labour ministry official.
Special payments, which include bonuses, rose an annual 7.5 percent, the fastest gain in two months, the data showed. The nationwide core consumer price index (CPI), which includes oil goods but excludes volatile fresh food prices, rose 0.9 percent in November from a year earlier, marking the 11th straight month of gains.
The CPI data shows that prices are moving toward the Bank of Japan's 2 percent inflation target, but there are concerns that wage gains this year will not keep up pace, some economists said. In separate data, the BoJ said the output gap - or the difference between actual and potential gross domestic product - was 1.35 percent in July-September last year. That was the highest since 1.47 percent in the first quarter of 2008.
The potential growth rate from April to September last year was 0.85 percent, up from 0.83 percent growth in the previous six-month period. A positive output gap usually spurs inflation and should be encouraging for the BoJ. However, households are turning more cautious. The consumer sentiment index fell to 44.7 in December from 44.9 in the previous month, separate data from the Cabinet Office showed on Tuesday.
One factor that may help consumer spending is the government's labour market reforms are drawing more women and elderly into the workforce, which could limit declines in consumption even if real wages fall, according to Hiroshi Miyazaki, a senior economist at Mitsubishi UFJ Morgan Stanley Securities. The number of employed rose 2.6 percent in November from a year earlier to 50.6 million people, labour ministry data showed on Tuesday.
The number of employed has risen 2 percent or more annually each month for the past 21 months, the data showed. "I'm not that worried about consumer spending," Miyazaki said. "More people will enter the workforce. Even if real wages don't rise that much, there will be more workers to spend money."
Comments
Comments are closed.