Questionable Japanese Wages Data Show Sharp and Unexpected Drop
(Bloomberg) -- Japanese wages fell unexpectedly in February as the labor ministry adjusted the sample group used to compile the data, muddying the waters for analysts trying to get a handle on the weak state of pay in the economy.
Labor cash earnings dropped 0.8 percent from a year ago, the ministry reported Friday, compared with projections for them to advance 0.9 percent. The reading for January was revised down to -0.6 percent from 1.2 percent.
- Click here to read more on problems with Japan’s wages data.
- Wages have mostly shown small gains in recent years amid a very tight labor market. They haven’t risen to a level that lets households spend freely enough to boost inflation.
- The Bloomberg Inflation Barometer, which draws on eight drivers of prices, points to a sharp slowing in the months ahead that may bring a spell of falling prices this summer.
- Japan needs household spending to hold up this year amid weakness in exports, which is weighing on factory output and capital investment. A sales-tax hike planned for October is expected to spark a strong rise in spending in the months ahead of the increase, followed by a sharp decline.
- "Abenomics’ only accomplishment has been the decline in unemployment and the jobs-to-applicant ratio beating Japan’s bubble period, but this hasn’t spread to wages," Hiroaki Muto, chief economist at Tokai Tokyo Research Center. "At the moment we’re headed toward a rise in the sales tax that isn’t accompanied by a rise in wages.”
What Bloomberg’s Economists Say...
“We’re taking it with a very big grain of salt,” says Bloomberg Economics, which estimates that wages may have actually risen 1.3 percent. “The reason for the drop appears to be a change in the survey sample, which means this year’s results are stacked up against results of a different sample last year -- leading to a severe distortion in the year-on-year comparison.”
--Yuki Masujima, Japan Economist
Click here to view his research
- Real wages, which are adjusted for inflation, fell 1.1 percent, compared with economists’ median forecast of 0.8 percent.
- The real wages figure for January was revised down to -0.7 percent from 1.1 percent.
- Household spending rose 1.7 percent from a year earlier, data from the ministry of internal affairs showed, versus the median estimate for an increase of 1.9 percent.
- The ministry said it doesn’t see households starting to rush to spend before the sales-tax hike planned in October.
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