Japan's Wage Growth Extends Streak to Five Months

Japan's labor market continues to show signs of strength, as average cash earnings rose by 4.7% year-on-year in July, according to the Ministry of Health, Labour and Welfare's Monthly Labour Survey.

This marks the fifth consecutive month that wages have increased above 3%, a streak not seen in decades.

The strong wage growth is largely driven by Japan's labor shortages, which have been exacerbated by its declining working-age population.

As a result, companies are able to offer higher wages without significantly impacting their balance sheets, thanks to their strong corporate profits.

This trend has significant implications for the Bank of Japan, as Governor Kazuo Ueda and his colleagues have stated that durable wage growth is essential for further rate adjustments.