- Hideo Kumano, chief economist at Dai-ichi Life Research Institute
Another signs that Shinzo Abe's inflation-promoting economic policies may be starting to feed through the labour market, lifting workers' wages. Japanese labour ministry said that base pay excluding overtime and bonuses climbed 0.1% in January from the same month a year earlier, ending a 22 month-long strike of falling wages. The overall pay, however, declined 0.2%, posting the first drop in three months. Stronger consumer spending as well as rising industrial production are boosting demand for part-time workers, as companies and households are willing to spend more ahead of the upcoming sales tax hike. Though, economist have expressed their concerns that overtime is likely to start receding before April. Japanese businesses had increased production in order to meet a pre-tax spike in consumption, but it is seen returning to normal or even lower levels of production.
While analysts are trying to predict whether the upcoming tax hike will derail economic growth, a senior BoJ official Eiji Maeda said that the world's third largest economy will withstand the potential headwinds. He also said that the economy is now more resilient to shocks than it was 17 years ago, as companies carry less excess investment, debt or payrolls, hence, the domestic financial system is more sound. Moreover, rising labour market participation by older workers and women is bolstering economic growth.
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