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Economy

Winter bonuses hit record in Japan, led by manufacturers

Payouts average $7,400 in sixth straight annual increase

The average winter bonus for employees at Japan's listed companies grew more than 3% from last year.
The average winter bonus for employees at Japan's listed companies grew more than 3% from last year.

TOKYO -- Winter bonuses at Japanese companies averaged an all-time high of 834,391 yen ($7,400) this year, according to a Nikkei survey released Monday, notching a sixth straight year of growth on strong corporate earnings.

The average across all industries was the highest since the survey began in 1975, topping the $7,300 tally from 2007 just before the financial crisis. This year's 3.28% growth surpassed a 2.18% increase last year to top the 3% mark for the first time in three years.

The strong 2018 bonuses reflect healthy earnings for the year ended in March since many companies set winter-bonus payouts during annual pay negotiations in spring. Net profit for Japan's listed businesses hit a second straight high in fiscal 2017.

The generous payouts are likely to help boost individual consumption. But with the U.S.-China trade war clouding the global economic outlook, next year may not see a repeat of such brisk growth.

The payout in the manufacturing sector climbed 3.38% to $7,750 in a second consecutive year of growth, jumping 16.24% among steelmakers and 5.97% for machinery manufacturers.

The growth at manufacturers outpaced that at nonmanufacturers for the first time in four years. In the three years through 2017, the nonmanufacturing sector aggressively sweetened bonus packages to retain employees amid a worsening labor shortage.

Buoyed by strong demand for memory chips, Tokyo Electron topped Japanese companies' winter-bonus ranking for a second-year in a row. 

Electronics companies lifted bonuses 3.12%. Tokyo Electron, which produces chip manufacturing equipment, increased the average payout 30.33% to $24,860, remaining the top-paying business for the second year running. Growing memory demand for data centers and smartphones spurred healthy equipment sales.

In second place was software developer JustSystems, which raised payouts 21.54% to $19,440 buoyed by the stellar performance of its cloud-based distance learning business.

Bonuses at nonmanufacturing companies grew 2.86% to $6,230 -- a fourth straight annual rise, but the pace was much slower than the 4%- and 5%-range growth in 2015 and 2016. Payouts grew 5.62% for builders and 4.75% for land transportation companies.

Factors like the U.S.-China trade war are raising uncertainty in the global economy. Though Japan's listed businesses are on track for a third straight record profit in the current fiscal year, the growth rate looks likely to shrink, with many already downgrading earnings forecasts.

"Economic prospects are growing increasingly uncertain, and corporate earnings growth appears to be reaching a peak," said Taro Saito at NLI Research Institute. "Next fiscal year could see a slowdown in bonus growth."

The survey contacted the 2,185 listed and leading nonlisted companies and used 537 responses provided by Nov. 30.

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