JAPAN DATA: Real Earnings Flat, Household Spending Negative But Above Forecasts

Japan labour earnings and household spending figures were a little bit better than expected, albeit more so in real than nominal terms. The headline cash earnings print rose 2.6% y/y, same as forecast, although the prior month was revised down to a 2.5% gain (initially reported at 2.8%). Real earnings were flat against a -0.1%y/y forecast (prior revised to -0.4%). Real household spending was still negative at -1.3%y/y, but well above market expectations of a -2.5% fall (prior was -1.1%). 

• On the same sample base - cash earnings were a little below market forecasts. For cash earnings we rose 2.7%y/y (forecast 3.0%), while scheduled full time pay rose 2.8%y/y (forecast 2.9%).
• In terms of the detail, bonus payments fell -1.7%y/y, versus a 12.4% gain in Sep. Hours worked were -0.5%y/y, from -2.7% prior. Otherwise, there weren't too many shifts in the detail relative to recent trends.
• The chart below plots real household spending (white line) against real labour earnings (orange line) in y/y terms. Further positive trends into 2025 around real wages should support a pick up in household spending.
• Still, the data may not have been strong enough to shift BoJ thinking around the Dec meeting. Market pricing for that meeting sits off recent highs (less than 40% after being around 65% recently). 

Fig 1: Japan Real Labour Earnings (orange line) & Household Spend (white line)