The average income level in Japan goes up in February

The average income level in Japan goes up in February

The change in the level of wages - an indicator published by the Ministry of Health, Labor and Welfare of Japan, and showing the average income level of a full-time employee before taxes, headed north 1.3% in February. Apparently, it surpassed expectations of a 0.5% jump after the updated previous value from 0.7% to 1.2%

The calculation of this indicator takes into account compensation for overtime work and bonuses, but it does not take into account the profit received in the form of interest on financial assets or income from capital gains. The increase in wages actually contributes to the growth of consumption, and as a result, the upward trend in the wage indicator is considered to be the inflation factor for the Japanese economy.

In addition to this, it has also become known that real monetary incomes headed south 0.5% in February year on year. It followed an updated sag of 0.6% in January.

Overtime payments, which appears to be the barometer of strength in corporate activity, inched up 1% versus January’s outcome of 0.1%.

Aside from that in February special payments, including bonuses, edged up 3% year-on-year following an updated outcome of 2.9% per annum in January.

As can be seen from the data, the real wages of Japanese workers went down for the third consecutive month in February after adjusting for inflation and it happens to be an alarming sign that consumer spending might speed down because wages are unable to keep pace with leaping prices.

The data also backs the view that the Bank of Japan target inflation rate of 2% will most probably remain remote, thus dropping a hint that Japan’s key bank won’t start reducing the scale of the stimulus program in the near future.

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