Real wages in Japan drop in August after two months of gains

Real wages in Japan fell in August, bringing into doubt the earnings recovery some politicians hope will drive a sustained economic recovery.

The labor ministry said real wages declined 0.6% year-on-year in August as high inflation ate away at solid nominal gains. This followed a positive reading in June, which broke a 26-month streak of real-wage declines, and another positive reading in July.

The increases in those two months “were largely due to volatile summer bonuses, so it was too early to conclude that real wages had achieved a sustainable positive trend,” Takahide Kiuchi, executive economist at Nomura Research Institute, wrote in a report released on Tuesday.