Japan's Nominal Wage Growth Decelerated In May, Nikkei 225 Eased Amid Trade Worries

Akira Ito
07 Jul, 2025
Tokyo

Stocks in Japan faced headwinds ahead of the looming U.S. trade deadline and a weak rise in nominal wages. 

The Nikkei 225 Index fell 0.6%, and the broader Topix eased 0.7% after the U.S. ramped up pressure on Japan to accept aggressive tariffs on vehicles and parts. 

The unpredictable Trump administration set August 1 as the deadline for the start of an additional 25% tariff on Japanese automobile imports, but the level of the tariff could change in the weeks ahead.

In addition, Japan's Prime Minister Shigeru Ishiba reiterated that Japan is not likely to "easily compromise" with Washington's proposal of up to 35% tariffs on Japanese imports.

On the economic front, Japan's nominal wages rose at the slowest pace in three months, according to the Ministry of Health, Labour, and Welfare. 

Japan's nominal wages rose at an annual pace of 1% in May, marking the third consecutive month of deceleration and falling to the lowest level since March 2024. 

Real wages, adjusted for inflation, decreased 2.9%, extending the decline in purchasing power for the fifth month in a row and falling at the fastest pace in nearly two years.

Smaller companies are still struggling to pass higher wages, following the increase of more than 5% agreed upon between large companies and labor unions. 

The string of weak nominal wage increases stoked the fears that Japan's economy may face an uphill climb to register positive growth in the current fiscal year. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.6% to 39,566.05, and the broader Topix fell 0.7% to 2,810.13. 

Mitsubishi UFJ Financial Holding declined 2.4% to ¥1,965.50, Sumitomo Mitsui Financial Holding decreased 2.1% to ¥3,614.0, and Mizuho Financial Group fell 2.4% to ¥3,948.0. 

Seven & I Holdings decreased 0.3% to ¥2,242.50, Fast Retailing Co. Ltd. declined 0.1% to ¥47,610.0, Takashimaya Co. Ltd. increased 0.4% to ¥1,098.50, and Aeon Co. Ltd. advanced 1.8% to ¥4,561.0.