According to preliminary data from the Japanese Ministry of Labor (NHK World Japan), real income in Japan decreased by 2.9% compared to the same period last year, the sharpest decrease since September 2023, marking the fifth consecutive month of decreased real wages. The survey was conducted with about 30,000 enterprises nationwide, with a scale of 5 employees or more.
Japanese workers average 300,000 yen (about $2,070) in salary over the same period, marking the 41st consecutive month of increase. In particular, the basic salary reached 268,177 yen (1,550 USD), up 2.1% over the same period, the 43rd consecutive month of increase. However, this salary increase did not keep up with the inflation rate, which remained above 3% for May and the sixth consecutive month of high inflation.
Reuters cited detailed figures showing the pace of nominative salary growth slowed down due to a sharp decrease in special bonuses of 18.7% in May. In addition, overtime wages have increased by only 1%, lower than the previous month, showing that businesses are still cautious about salary increase policies.
The weak salary increase compared to inflation raises concerns that consumer spending in Japan could weaken, threatening the recovery momentum of the world's fourth largest economy, in the context of global instability and trade risks from new US tariffs.
This situation could also make it difficult for the Bank of Japan (BoJ) to calculate when to continue raising interest rates to normalize monetary policy, as consumption is still an important factor in maintaining economic recovery momentum.
In the face of the above situation, the Yen exchange rate is still under pressure, with the USD/JPY pair remaining above the threshold of 145 in the context of a stronger USD thanks to expectations of the Fed reducing interest rates more slowly, while the prospect of poor wages and spending in Japan makes it difficult for the Yen to regain momentum to increase prices in the short term.
(See more about the latest Yen exchange rate HERE)
