Japan February real wages dip 1.1 percent year on year

TOKYO (Reuters) - Japan’s inflation-adjusted real wages fell in February from a year ago at the fastest pace in more than three years, government data showed on Friday, in a sign that consumption could weaken due to dwindling consumer spending power.

People cross a street in Tokyo March 18, 2015. REUTERS/Yuya Shino/Files

Real wages fell 1.1 percent in February from a year ago, the biggest decline since June 2015. Data for January was revised down to show an annual decrease of 0.7 percent.

Recent revelations that labour ministry officials used faulty polling methods that led to downward revisions have cast doubts on the accuracy of wages data published by the government between 2004 and 2017.

Prime Minister Shinzo Abe’s government has defended its view that incomes are improving despite the downward revisions, but the fall in real wages undercuts this argument.

Monthly wage data showed nominal total cash earnings dropped an annual 0.8 percent in February, following a revised 0.6 percent decline in the year ended January.

Regular pay, which accounts for the bulk of monthly wages, dropped an annual 0.2 percent in February after a revised 0.6 percent annual decline in January.

One-off special payments dived 34.2 percent annually in February as companies stopped paying yearly bonuses.

Overtime pay, a barometer of strength in corporate activity, fell 0.5 percent in February from a year earlier.

The labour ministry said in January it used faulty polling methods in compiling monthly wage data - which covers about 33,000 firms - and had failed to accurately depict the actual strength of wage growth.

The error has made it more difficult to determine the trend for wages and consumer spending.

Reporting by Stanley White, Editing by Sherry Jacob-Phillips