Japan’s regular wages increased in July by the most in nearly 10 years, aiding Japanese Prime Minister Shinzo Abe’s efforts to reflate the world’s third-biggest economy.
Base pay climbed 0.6 percent from a year earlier, the biggest increase since November 2005, the labor ministry said yesterday. Overall wages adjusted for inflation rose 0.3 percent, the first rise in more than two years, after a steep decline in the previous month.
“Monthly pay increases are picking up momentum as the effects of base pay hikes spread,” SMBC Nikko Securities Inc economist Hiroshi Watanabe said.
“With increasingly tighter labor markets, this trend will continue and gradually spur domestic consumption,” Watanabe said.
Household spending unexpectedly fell in July, declining in every month expect one since the government raised the nation’s sales tax in April last year, according to data last week. Retail sales have fared better, supported by an influx in tourists, rising for a fourth consecutive month.
Differences in the timing of bonus payments from year to year have contributed to swings in the wage data, with overall labor cash earnings — which include overtime and special payments — falling 2.5 percent in June from a year earlier before rebounding 0.6 percent in July. Bonus payments rose 0.3 percent in July from a year earlier.
“The limited yet stable and positive trend seen in basic wages is a positive for income conditions. However, we believe the stagnation in summer bonuses weighed on consumption during the summer,” Goldman Sachs Group Inc economist Yuriko Tanaka wrote in an e-mailed note.
Japan’s economy contracted an annualized 1.6 percent in April-June from the first quarter of the year, as consumers and businesses reduced spending and exports fell. Sluggish overseas shipments and industrial production are weighing on a rebound this quarter.
Weakness in exports and output is expected to pass, Bank of Japan Governor Haruhiko Kuroda said last week in New York, before data showed inflation as measured by the central bank’s key gauge disappearing for a third time this year.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
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