Driven by solid corporate earnings and a tightening labour market, wage growth momentum in Japan remains robust, providing further justification for the Bank of Japan to raise interest rates again in the coming months.
Data from the Ministry of Health, Labour and Welfare released on Wednesday showed that nominal wages in June rose 3.4% year-on-year, accelerating from a revised 3.3% increase in May. This figure matched the median estimate of economists surveyed by Bloomberg and marks the fifth consecutive month of wage growth exceeding 3%, the longest such streak in 34 years.
Base wages climbed 3.4%. A more stable indicator, which excludes bonuses, overtime pay, and sampling biases, showed that wages for full-time employees rose by 2.9%. Real wages increased by 1.7%, marking the sixth straight monthly gain, the longest consecutive rise since 2021.
This steady wage growth could pave the way for the Bank of Japan to raise interest rates again no later than December, with the possibility of an even earlier move. Last week, the central bank held rates steady while signalling that a rate hike as early as September remains possible. Last Friday, the Japanese government intervened in the foreign exchange market alongside the United States to support the yen, further strengthening market expectations that the BOJ will act sooner rather than later.
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