Jan Wages Stronger Than Forecast

Japan Jan wages data was stronger than expected. The headline labor cash earnings rose 2.0% y/y, versus a 1.2% forecast and a prior 0.8% gain. In real terms, earnings were still in negative terms, but not as much as forecast. We were -0.6% y/y, versus -1.5% projected and -2.1% prior.

• Cash earnings on the same sample basis were +2.0%y/y, against a 1.9% forecast and 2.0% prior. Scheduled full time pay (on the same sample base) was 2.0% y/y in line with expectations but down slightly from the 2.1% prior outcome.
• Bonus payments were +16.2%y/y, versus 0.5% in Dec last year. This component tends to be volatile, so there may be some payback in Feb.
• Nevertheless, we saw broad based y/y gains across nearly all of the sub-categories (hours worked, overtime etc).
• This may aid confidence that firmer wage gains will continue in the first half, particularly during the current wage negotiation period, where there is evidence that some firms are raising wages more so than they did last year.
• Bloomberg noted that BoJ officials are getting more confidence over the strength of wage growth, see this link. Also note the latest MNI policy team insight, noting the BoJ could end NIRP in March (see this link).