Japan's Current Account Surplus Widened In May, Real Wages Continue to Decline

Akira Ito
08 Jul, 2024
Tokyo

Benchmark indexes in Tokyo turned lower for the second day in a row after real wages declined in May for the 26th month in a row. 

The Nikkei declined 0.3% and the broader Topix dropped more than 0.5% amid interest rate uncertainty and weak consumer sentiment. 

Japan's average nominal wages for full-time workers increased 2.1% to 378,803 yen, and part-time workers rose 3.2% to 108,511 yen. 

Excluding bonuses and incentive pays, average wages increased 2.5% to 263,539 yen, and overtime and other allowances advanced 2.3% to 19441 yen. 

The 5.1% rise in negotiated pay by the workers union at the largest companies during the annual wage negotiation this spring supported the wage gains, but smaller and medium-sized companies raised wages between 2% and 3%, closer to the long-term average over the last decade. 

Cash earnings for an average worker, including base and overtime, increased 1.9% to 297,151 yen or $1,850.

Despite the nominal wage gains, real wages, after adjusting for inflation, decreased 1.4% in May following the revised decline of 1.2% in April, according to the monthly report released on Monday by the Ministry of Health, Labor, and Welfare. 

Meanwhile, Japan's current account surplus rose more than expected in May. 

Current account surplus increased to 2,849.9 billion yen from 2,010.1 billion in the same month a year earlier, the Ministry of Finance reported Monday. 

The current account generated surplus for the 16th month in a row as primary income surplus expanded to 4,211.1 billion yen from 3,726.7 billion in the previous year. 

The goods trade deficit narrowed to 1,108.9 billion yen from 1,199.8 billion yen after exports rose 12.1% and imports advanced 9.3%. 

 

Japan Stock Movers 

The Nikkei 225 stock average decreased 0.3% to 40,780.70, and the Topix Index dropped 0.6% to 2,867.61. 

Tech stocks traded volatile, but artificial intelligence-linked stocks struggled after advancing in the morning session. 

Tokyo Electron, Screen Holdings, Advantest, and SoftBank edged down a fraction. 

Banks were also among the leading decliners in Monday's trading. 

Sumitomo Mitsui, Mizuho Financial, and Mitsubishi UFJ declined between 0.3% and 1.2%. 

Export-linked companies declined for the second week in a row on the looming market intervention to support the yen. 

Kawasaki Kisen Kaisha, Omron, Canon, Hitachi Zosen declined more than 3%. 

Retail stocks declined after advancing for two weeks in a row. 

J. Front Retail, Seven & I, Isetan Mitsukoshi, Takashimaya, and Fast Retailing  traded in a tight range between  a decline of 0.3% and a rise of 1.2%.