Japan's Real Wages and Household Spending Declined In August, Current Account Surplus Surged to Record High

Akira Ito
08 Oct, 2024
Tokyo

Stock market indexes in Tokyo closed down and halted a three-day rally following a rebound in Treasury yields in overnight trading. 

The Nikkei 225 stock average decreased 1%, the Topix index dropped 1.5%, and the yen rebounded 0.4% to 147.57 against the U.S. dollar amid ongoing uncertainty related to the Bank of Japan's monetary policy. 

Investors in Japan were also on the backfoot after the National Reform and Development Commission in China failed to announce any new meaningful and specific measures to revive consumption at a widely publicized press conference held Tuesday. 

The Hang Seng Index plunged as much as 8% in early trading following yet another policy disappointment in five months, after policymakers touted the possibilities of strong fiscal measures.

Closer to home, on the economic front. Japan's nominal wages rose in August, but real wages fell for the first time in three months as wage growth lagged the acceleration in price increases. 

Household spending is a key indicator for private consumption, as it accounts for more than half of Japan's economy.

The average total wage income, including overtime, or nominal wage, increased 3% to 295,000 yen, or about $2,000, according to the Ministry of Health, Labor, and Welfare. 

Nominal wages increased for the 32nd consecutive month, and average for full-time workers increased 2.7% to 377,861 yen and for part-time workers rose 3.9% to 110,033 yen.

Average monthly income of salaried households of two or more people increased 2% in real terms to 574,334 yen, and spending decreased 1.9% to 297,487 yen. 

Japan's households are struggling with high costs of living amid rising costs of fuel and food and stagnant wages for more than two decades.

But in March of this year, large employers agreed to increase wages that exceeded inflation for the time in several years, but those wage gains were not matched by small- and medium-sized companies mostly operating in the domestic economy. 

In other economic news, Japan's current account balance was in surplus for the 19th consecutive month in August, the Ministry of Finance reported Tuesday. 

The current account surplus rose to a record high of 3.803 trillion yen from 2.293 trillion yen, after the deficit in the international goods account shrank to 378 billion from 755 billion yen and the international service account narrowed to 105 billion from 302 billion yen. 

 

Japan Stock Movers

The Nikkei 225 Stock Average declined 1% to 38,937.54, and the broader Topix index decreased 1.5% to 2,699.15.

Investors looked forward to the start of the earnings season later in the week, and retailers were in focus. 

Seven & I edged up 0.3% to ¥2,230.0, AEON Co Ltd. decreased 1.1% to ¥3,894.0, and Fast Retailing fell 0.5% to ¥50,140.0. 

Tokyo Electron fell 0.7% to ¥25,460.0, Advantest rose 2.5% to ¥7,370.0, and Lasertec Corporation fell 2.2% to ¥23,625.0. 

Nippon Yusen declined 1.3% to ¥4,898.0, Kawasaki Kisen Kaisha dropped 1.5% to ¥2,021.0, and Mitsui O.S.K. Lines fell 1.9% to ¥2,021.0.