Japan's Real Wages Flat, Household Spending Falls 1.3% In October

Akira Ito
06 Dec, 2024
Tokyo

Market sentiment in Tokyo was weak on the final day of the week following the decline on Wall Street in overnight trading. 

The Sensex index fell 0.8%, and the broader Topix index dropped 0.5% after the benchmark indexes in New York rested. 

Closer to home, Japan's nominal wages, or workers's average total cash earnings, in October rose 2.6% to 293,401 yen, or $1,955, said the Ministry of Health, Labor, and Welfare on Friday. 

Base salary, or regular pay, increased 2.7% in October, the fastest pace in 32 years, as large- and medium-sized companies agreed to increase wages by 5.1% in the annual spring wage talks earlier in the year.

Overtime pay, a measure of business strength, rebounded to an increase of 1.4% from the decline of 0.9% in the previous month. 

Overall nominal wage, which includes base and overtime pay, rose 2.6% to 293,401 yen, an increase for the 34th consecutive month. 

Real wages, adjusted for an inflation rate of 2.6%, were flat from a year ago, from the revised 0.4% decline in September and 0.8% fall in August. 

Excluding bonuses and nonscheduled payments, average wages advanced 2.7% to 265,537 yen, the largest increase in nearly 32 years. 

The average wages for full-time workers increased 2.8% to 336,070 yen, marking the largest gain since comparable records became available in 1994. 

A separate report by the government showed that average household spending declined 1.3% in October, indicating stretched finances amid rising costs of food and energy. 

Real household spending, by a family of two or more, after adjusting for inflation, declined 1.3% to 305,819 yen, the Ministry of Internal Affairs and Communications reported Friday. 

Household spending is a key indicator of Japan's economic health, which accounts for more than half of Japan's gross domestic product. 

 

Japan Stock Movers

The Nikkei 225 Stock Average declined 0.8% to 39,091.17, and the broader Topix index fell 0.6% to 2,727.22. 

Despite Friday's decline, the Nikkei 225 gained 2.7%, and the Topix increased 1.4% for the week, respectively. 

The latest updates on household spending and nominal wage increase supported the case for the Bank of Japan to raise rates, but the next rate increase could take place in December or January. 

The yen eased 0.2% to 150.45 against the U.S. dollar and closed nearly unchanged after a week of trading. 

Tokyo Electron declined 2.6% to ¥23,950.0, Advantest Corp. fell 3.5% to €55.01, and Lasertec Corporation fell 1.4% to ¥15,755.00. 

Toyota Motor eased 0.1% to ¥2,629.0, Honda Motor gained 0.2% to ¥1,286.50, and Nissan Motor jumped 2.7% to ¥367.50. 

Mitsubishi UFJ Financial Group eased 0.6% to ¥1,809.50, Sumitomo Mitsui Financial Group decreased 0.7% to ¥3,761.0, and Mizuho Financial Group declined 0.3% to ¥3,814.0.