Japan – May wages

The labour market is tightening. But while wage growth is accelerating, the pick-up is modest, and doesn't look sufficient to create a lot of upwards pressure on prices.

The monthly labour survey shows that the labour market is continuing to tighten, with employment increasing. Overtime hours did fall back a bit in May, but that isn't unexpected given the strong bounce since Q1.

However, the rise in full-time employment that started around 2013 was knocked off-course by covid, and hasn't yet recovered. And income growth remains tepid. Earnings are growing more quickly than they have done for much of the last couple of years, but not by enough to really outpace inflation, and so are stagnating in real terms. Moreover, the wage data aren't suggesting that inflation is going to pick up from here.