JAPAN DATA: Labor Earnings Below Forecast But Trends Still Positive

Japan Sep labor earnings data was slightly below market forecasts. Cash earnings rose 2.8%y/y against a 3.0% forecast, the prior August print was also at 2.8%. In real terms, earnings were -0.1%y/y, against a 0.1% forecast, the August outcome was -0.8%. The Sep cash earnings, on a same sample base, was 2.9%y/y against a 3.5% forecast and 3.5% prior (which was revised higher). Scheduled full time pay on a same sample base was 2.9%y/y, in line with forecasts and 2.8% prior. 

• In terms of the detail, it still looked reasonable. Scheduled pay rose 2.6% y/y, bonus payments were up 16.1% y/y. Headwinds came from hours worked (-2.5%), with scheduled and overtime work was also down in y/y terms.
• On a same sample basis we were generally close to August outcomes (except for the cash earnings headline).
• The trends still appear positive, albeit volatile. The chart below plots real labor earnings against household spend. So whilst real wages remained just in negative territory (the orange line), we are still gradually trending higher, which should aid spending, all else equal.
• At the margin though, today's data won't add any hawkishness to the BoJ's Dec meeting.  

Fig 1: Japan Real Labor Earnings & Household Spending