Tuesday, March 4, 2008

Wages Rise by One Percent in Japan, the Greatest Rate in 19 Months

by Michelle Roberts

Wages in Japan climbed by one percent which was the greatest pace the wages experienced in as many as nineteen months in January. The Japanese Labor Ministry said that this rise in wages will work as an encouragement for customers when export driven development of the economy is set to grow down. Monthly wages that also includes overtime as well as bonuses have risen by 1% which is the greatest since June 2006. Bonuses in Japan also climbed by 12.1%. The rise in the wages of Japan comes as a great relief to the many households of Japan that had the lowest confidence in four years as costs of gasoline, noodles and rice grew.

In the last month Toshihiko Fukui, the Governor of Bank of Japan expressed that a cycle of greater profits fuelling individual income and spending stood as it is even though the wages dropped in 2007. The share of spending by consumers is over half in the economy. Chief Economist with Lehman Brothers Japan Inc. in Tokyo, Kenichi Kawasaki, said that the rising trend in the regular income may indicate a positive start for consumer spending. He further added that for consumer spending wages are of the greatest importance than sentiments. The Yen traded at 103.04 per dollar in Tokyo from its earlier 103.17 before the report was announced. Household expenditure grew at the fastest speed in over three months in January and the unemployment rate remained steady at 3.8% according to reports in the last week. Consumer prices except fresh food items rose by 0.8% from the earlier year due to companies transferring the higher oil costs, wheat and soybeans.

The Chief International Economist with Capital Economics Ltd. in London, Julian Jessop, said that the jobless rate is comparatively low and growth in employment is strong, he further added that the hard data indicate that spending is rising in Japan. Even though the greater costs of energy and materials are straining the profits of the small businesses, the wages given by these firms have grown. The wages paid by the businesses that employed 5 to 29 people rose for the first time in over two years. The Labor Ministry of Japan also said that wages except overtime and bonuses climbed 0.6% which was a third monthly gain for the economy.

Chief Economist at UBS AG in Tokyo, Takashi Omori, opined that rising wages can be positive news for customers but it is unlikely of the wages to continue the momentum that they have gained. He also said that firms will most likely stay on their guard due to growing oil prices and a possible slowdown in the US economy. The Japanese government brought down its forecast for the second biggest economy of the world for the first time in 15 months in February this year citing that the growth will be steady as exports and production cool down. The exports for the Japanese economy assisted in the longest postwar development pace with a yearly 3.7% in the last quarter.

 

 

 

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