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Economy

Japan's real wages drop for 6th straight month in June

Concerns raised over strength of consumption ahead of planned October tax hike

Solid domestic consumption has been important to offsett the negative effects of the country's weak exports. (Photo by Toshiki Sasazu)

TOKYO (Reuters) -- Real wages in Japan adjusted for inflation slipped for a sixth straight month in June, raising a red flag for the strength of domestic consumption ahead of a planned sales tax hike in October.

Real wages dropped 0.5% in June from a year earlier, labour ministry data showed on Tuesday, after a downwardly revised 1.3% annual decline in May.

Monthly wage data showed nominal total cash earnings in June increased 0.4%, climbing for the first time since last December after a revised 0.5% decline in May.

Regular pay, which accounts for the bulk of monthly wages, also rose for the first time since December, edging up 0.1%.

One-off special payments were up 0.9% in June from a year earlier, after dropping a revised 0.4% in May.

Overtime pay was 0.2% lower in June from a year earlier, falling again after growing a revised 0.9% in May.

Revelations this year that labour ministry officials used faulty polling methods which forced revisions cast doubt on the accuracy of the ministry's wage data from 2004 to 2017.

The error has made it harder to gauge the actual strength of wage growth.

Japan is scheduled to raise its sales tax to 10% from 8% in October. The last sales tax hike in April 2014 hit consumers hard and triggered a deep downturn.

Solid domestic consumption has partly offset the drag on the world's third-largest economy from weak exports.

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