Japan's Labor Cash Earnings rise faster than expected to 2.1% YoY versus 1.7% forecast
04.06.2024, 23:37

Japan's Labor Cash Earnings rise faster than expected to 2.1% YoY versus 1.7% forecast

Japan's Labor Cash Earnings rose 2.1% YoY through April, rising above the forecast 1.7%, with the previous period's cash earnings also getting revised higher to 1.0% from the inital print of 0.6%.

Rising labor earnings improve the Japanese inflation outlook. The Bank of Japan (BoJ) has been stubbornly entrenched in hyper-easy monetary policy as the Japanese central bank fears a future return to a disinflationary envirnoment. With labor cash earnings rising faster than expected, it will add pressure to the BoJ to start clamping down on an easy monetary policy stance that has undercut the Yen across the board through 2024. The rate differential between the Yen and all other global currencies has left the Yen struggling across the board.

Market reaction

USD/JPY is testing the 155.00 handle in early Wednesday action, rebounding after a broad-market Yen bid dragged the pair sharply down to a near-term floor at 154.60, backsliding from the week's peak bids near 157.50.

About Japan's Labor Cash Earnings

This indicator, released by the Ministry of Health, Labor and Welfare, shows the average income, before taxes, per regular employee. It includes overtime pay and bonuses but it doesn't take into account earnings from holding financial assets nor capital gains. Higher income puts upward pressures on consumption, and is inflationary for the Japanese economy. Generally, a higher-than-expected reading is bullish for the Japanese Yen (JPY), while a below-the-market consensus result is bearish.

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