Japan: Cash earnings bounce back - ING

The August cash earnings rise helps firm up expectations of sustainability in Japanese growth, but it still looks very vulnerable, according to Rob Carnell, Chief Economist at ING.

Key Quotes

“Labour cash earnings are almost as important in Japan as they are in the US and the rest of the G-7. Despite a prolonged spell of stronger GDP growth than usual, without some wages growth to underpin consumer spending, the sustainability of this growth will remain in doubt. Today’s data for August show a decent bounceback in the YoY growth rate to 0.9% from -0.6% in July, but these are not seasonally adjusted numbers, are very volatile, and it is hard to read too much into one month’s numbers.”

“Encouragingly, compared to the July figures, there were broad gains in the earnings components, though much of the rise remained bonus related. More negatively, hours worked were down 0.7%YoY, a decline from -0.4%YoY in July. Falling hours don’t normally go together with rising wages, so this will need watching. It isn’t all good.”