Japan: Labour earnings rose in September, again – ING

According to Rob Carnell Chief Economist at ING, we need to see continued acceleration in Japanese wage growth for a sustained pick-up in consumer spending driving economic growth.

Key Quotes

“Prime Minister Abe has been exhorting companies for years to pay more to their workers. Maybe this is now beginning to happen, as cash earnings in September rose by 0.9% YoY, up from 0.7% in August, and the second straight monthly rise in YoY earnings. Admittedly, much of the gain came in the bonus element. And we believe that to be more effective in boosting consumer spending, regular contracted earnings would need to rise. These regular earnings did also rise, by 0.7% YoY (0.2% in August), and though less than the total figure, this is also the highest growth figure we have seen since May, and encourages us to think that wages are now on an upward slope.”

“That said, even with this increase, wages are still down in real terms from a year ago (-0.1% YoY), so we need to see more figures even stronger than this to propel the case for a sustained pick-up in consumer spending driving economic growth. Until and unless this happens, any thoughts of the BoJ easing up on QQE look to be fantasy.”