Real Labour Earnings & Household Spending Weaker Than Expected

Japan June labor earnings were weaker than expected. Real cash earnings fell -1.6% y/y, versus a -0.9% forecast and -0.9% prior. We are above the lows from earlier in 2023, which were around -4% y/y, but the trend remains largely sideways since the middle part of last year. Nominal earnings were also weaker than expected, +2.3% y/y, versus +3.0% forecast and 2.9% prior. Houshold spending fell by -4.2% y/y, versus the -3.8% forecast and -4.0% prior. The trend on household spending looks flat to down since the start of the year.

• In terms of the detail, on the earnings side, bonus payments eased back to +3.5% y/y from +35.9% in May. Overtime rose to +2.3% y/y from 0.5%, the strongest result since December last year, while regular earnings were +1.4% y/y, down slightly from 1.7% in May.
• On the spending side, real spending was +0.9% m/m, versus -1.1% last month. Still, the y/y and 3 month annualized trends remain comfortably in negative territory.
• At the margin, this data will reinforce BoJ's continued easing stance.

Fig 1: Japan Labour Earnings (Orange Line) & Household Spending (White Line)

Source: MNI - Market News/Bloomberg