Japan's Wages Jump by Biggest Margin in Almost 26 Years

  • In Business
  • 2023-02-06 23:51:59Z
  • By Bloomberg

(Bloomberg) -- Japanese workers' nominal wages in December rose at the fastest pace since 1997, an acceleration in gains that may fuel speculation the central bank will consider shifting policy after Governor Haruhiko Kuroda steps down in April.

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Nominal cash earnings for Japan's workers jumped 4.8% from a year earlier in December, the labor ministry reported Tuesday. Hefty increases in winter bonuses boosted pay packets well beyond a 2.5% growth estimate by economists.

With developments in wages closely linked to the possibility of policy change at the Bank of Japan, the unexpectedly large gain may stoke market bets that the central bank will adjust or back away from its stimulus program under a new governor. Still, the jump offers only a snapshot of one month's figures.

Scheduled pay rose 1.9%, offering a figure closer to the trend of wages outside extra payments, and well below the 3% the central bank and economists say is needed to support stable 2% inflation in Japan.

Real wages also edged up for the first time since March, ekeing out a 0.1% gain, a figure that shows the pay gains in Japan are still far from providing households with extra spending power after accounting for inflation.

Separate figures showed household spending fell 2.1% in real terms in December from the previous month to take it 1.3% below last year's level, an indication that price growth is weighing on consumption.

Speculation over the direction of monetary policy continues to simmer as the government prepares to make its nomination for Kuroda's replacement later this month.

A Nikkei report Monday said the government had approached Deputy Governor Masayoshi Amamiya to become BOJ chief. Economists and investors see Amamiya as the front-runner closest to being a candidate of continuity.

Government officials denied the report was based on facts.

--With assistance from Isabel Reynolds.

(Adds household spending figures for December)

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