Japan real wages decline for fifth month in July as pandemic woes persist

FILE PHOTO: A worker walks in a factory at the Keihin industrial zone in Kawasaki, Japan February 17, 2016. REUTERS/Toru Hanai/File Photo

TOKYO (Reuters) - Japan’s real wages fell for the fifth straight month in July, the government said on Tuesday, pointing to possible deeper strains ahead for consumer spending as the impact on the economy from the coronavirus pandemic drags on.

Data out later in the morning is expected to show the economy shrank more than previously estimated in the second quarter as the health crisis delivered a blow to capital spending, in a sign of the challenge policymakers face in avoiding a deeper recession.

Labour ministry data on Tuesday showed inflation-adjusted real wages, a key gauge of households’ purchasing power, declined 1.6% in July from a year earlier, following a downwardly revised 2.1% drop the previous month.

Overtime pay, a barometer of strength in corporate activity, dropped 16.6% in July from a year earlier, down for the 11th straight month, while nominal total cash earnings dropped 1.3% in the year to July.

Regular pay - or base salary, which makes up most of total cash earnings - saw a modest increase, growing 0.3%, which was smaller than June’s downwardly revised 0.4% gain.

The COVID-19 crisis continued to pile pressure on companies, leading to a 2.4% decrease in special pay, including one-off bonuses, the data showed.

The government will release the revised April-June gross domestic product data at 8:50 a.m. Japan time on Tuesday (2350 GMT on Sept. 7).

The ministry defines “workers” as 1) those who were employed for more than one month at a company that employed more than five people, or 2) those who were employed on a daily basis or had less than a one-month contract but had worked more than 18 days during the two months before the survey was conducted, at a company that employs more than five people.

To view the full tables, see the labour ministry's website at: here

Reporting by Daniel Leussink; Editing by Hugh Lawson