Headline Wages Rise As Negotiated Increases Start To Impact Data

Japan April wage outcomes were firmer than forecast in terms of the headline results. Labor cash earnings rose 2.1% y/y (against a 1.8% forecast and a revised 1.0% March gain). Real earnings were -0.7%y/y, against a -0.9% forecast and -2.1% in March.

• Scheduled pay (not on a same sample basis) rose 2.3% y/y, up from 1.7% in March.
• The Japan authorities will be looking for further improvement in real wage outcomes (trending back above 0%), which is a key policy objective to ensure a recovery in consumption spending and sustainably achieving the 2% inflation target.
• It was a bit more mixed in terms of cash earnings on a same sample base. In y/y terms we rose 1.7%y/y, versus 2.1% forecast and 1.9% prior (which was revised down from 2.2% initially reported). The trend looks a little softer for this metric, but remains above 2023 lows.
• Scheduled full time pay on a same base basis rose 2.1%y/y, in line with expectations and unchanged from March.
• The recently negotiated wage outcomes, where workers secured a +5% wage gain will have impacted today's data. The BoJ suggests around 40% of the annual gain will be reflected in the April data, while 80% will factored in by July (see this BBG link).