MNI BRIEF: Japan's July Real Wages Post 2nd Straight Rise

MNI (TOKYO) - Inflation-adjusted real wages, a barometer of households' purchasing power, stayed in positive territory in July for the second straight month, up 0.4% vs. 1.1% in June, 1% higher than market expectations, preliminary data released by the Ministry of Health, Labour and Welfare on Thursday showed.

July’s real wages were boosted by summer bonuses (+6.2% in July vs. +7.8% in June) on the back of solid corporate profits.

The positive real wages showed households’ income has caught up with price rises, easing the impact of inflation on consumers.

Bank of Japan officials are focused on how weak private consumption will evolve ahead of October when many businesses plan to revise their retail prices. (See MNI: Japan Govt Upgrades Economic View, Private Consumption)

Total CPI minus imputed rents rose 3.2% y/y in July, slowing from 3.3% in June. Scheduled earnings rose 2.7% y/y in July after rising 2.2% in June and total cash earnings, or nominal wages, posted a 3.6% y/y gain, accelerating from 4.5% in June and marking the highest level in over 31 years.

Overtime pay fell 0.1% y/y in July after rising 0.9% in June, but bonuses and other special pay rose 6.2% y/y following June’s 7.8%.