By Aki Ito
Nov. 2 (Bloomberg) -- Japan’s wages slid for a 16th month in September, a sign that consumer spending may be too weak to support the economy’s recovery from its deepest postwar recession.
Monthly wages including overtime and bonuses slipped 1.6 percent from a year earlier to 266,364 yen ($2,928), the Labor Ministry said today in Tokyo.
Today’s report indicates that consumer spending, which accounts for more than half of the economy, won’t be able to drive growth even after the unemployment rate fell to a four- month low in September. Companies that have enjoyed renewed demand thanks to some $2 trillion in global stimulus are still under pressure to keep the lid on wages because the yen’s advance is eroding profits, economist Kyohei Morita said.
“Wages will keep falling for some time,” said Morita, chief economist at Barclays Capital in Tokyo. “Exports are picking up, but with a stronger yen, there will be continued pressure to cut costs.”
The yen has risen 5 percent against the dollar in the past three months, eroding exporters’ repatriated earnings and making their products less competitive abroad. Mitsubishi Motors Corp. posted a first-half loss because of weak demand and a stronger currency.
Japan’s largest companies plan to slash winter bonuses at the fastest pace on record, the Japan Business Federation said in Tokyo last week. Firms typically pay the bonus, which is often equivalent to several months of pay, in December.
Despite the decline in wages, overtime hours among manufacturers rose 4.1 percent from a month earlier as factories boosted output amid a rebound in trade. Industrial production rose for a seventh month in September.
To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net
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