Real Wages Fall In Japan for the 27th Consecutive Month; BOJ Reiterates Accommodative Policy

Akira Ito
09 May, 2024
Tokyo

Benchmark indexes in Japan lacked direction, and the yen traded in a tight range after the release of the summary of the policy meeting held in April. 

Policy committee members highlighted the inflation risks from rising wages but reiterated their commitment to keeping the accommodative stance in purchasing Japanese government bonds. 

On the wage front, Japan's inflation-adjusted real wages declined for the 24th month in a row in March, according to the latest data released by the Ministry of Health, Labor, and Welfare. 

Nominal cash wages, including overtime pay, increased 0.6% to 301,193 yen, or $1,940. 

Nominal wages rose for the 27th month in a row, but after adjusting for inflation, they continued to decline. 

The consumer price tracked for determining real wages rose 3.1% in March, significantly higher than the 0.6% rise in nominal wages. 

The full-time worker's average nominal wage increased by 0.8% to 386,795 yen, and the part-time worker's advanced by 2.5% to 108,036 yen. 

The total working hours per worker decreased by 2.7% from a year ago to 136.2 yen.

The latest data excludes the spring wage gains negotiated between the large companies and labor unions, and the government data showed only 20% of small and medium-sized businesses increased wages by more than 5%.

The so-called "shunto" wage negotiations, representing annual wage negotiations between the largest Japanese corporations and labor unions, generally set the tone for wage adjustments for other companies in Japan. 

The Japanese yen traded around  155.70 against the dollar, slightly higher than in the previous session. 

The Nikkei 225 Stock Average decreased 0.1% to 38,146.21, and the Topix index added 0.4% to 2,716.69. 

Leading tech companies traded sideways in choppy trading. 

SoftBank fell 2.5% to ¥7,736.0, Advantest declined 0.9% to ¥5,106.0, Screen Holdings advanced 0.6% to ¥17,600.0, and Tokyo Electron dropped 3% to ¥35,210.0. 

Sumitomo Mitsui Financial advanced 1.3% to ¥8,913.0, Mizuho Financial added 1.2% to ¥3,033.0, and Mitsubishi UFJ Financial gained 2.2% to ¥1,583.50. 

Earnings update lifted stocks of Omron and Orix but lowered Yamato Holdings.  

Omron Corp. rose 6.5% to ¥6,013.0, Orix advanced 6.5% to ¥3,426.0, and IHI jumped 8.3% to ¥4,119.0.

Yamato Holdings dropped 11.8% to ¥1,777.0.