Real Wages Growth Still Comfortably Negative In Y/Y Terms

Japan September labor earnings were close to expectations. The nominal outcome at 1.2%, as forecast, and a modest step up from the revised 0.8% pace recorded in August. We are well down from earlier 2023 highs, but displaying more of a modest trend in recent months.

• Bonus payments were still a drag (-6.0%y/y). While contracted and regular earnings were similar to August outcomes.
• In real terms, wages remain comfortably in negative territory at -2.4% y/y, a slight improvement on August's -2.8% outcome.
• Wages are a key focus point in terms of the BoJ outlook and driving sustainable inflation gains, but also politically. PM Kishida's approval rating has been hit amid cost of living pressures. Note it was reported late yesterday by Nikkei that the government will meet with labor groups and businesses later this month to discuss continued wage increases (see this BBG link).
• Household spending was also close to expectations at -2.8% y/y (-2.9% forecast). We are up from recent lows near -5 y/y, but trend improvement is not yet evident.