Strong labor demand in Japan boosts outlook for wage hike

Japan auto shares

Japan’s labor demand increase in December climbed to all-time highs in over four decades, indicating that labor unions could receive extra leverage in impending spring wage negotiations.

Retail sales sharply increased in December on robust spending on automotive and clothes which would lessen doubts regarding an unexpected drop in household spending in the same month.

Labor data indicates that employers may be persuaded to conform to the government’s request to increase wages by 3 percent or more at the yearly negotiations with unions this spring, bolstering the chance that inflation and consumer spending may gain traction.

The ratio of jobs to applicants increased from 1.56 to 1.59 in November, surpassing the median forecast of 1.57 and marking the highest since January of 1974.

According to the data of Internal Affairs ministry, the seasonally adjusted employment rate rose from 2.7 to 2.8 percent in the month of November.

Retail sales rose 3.6 percent in December from the previous year, in contrast with a media market outlook for a 1.8 percent increase.

Japanese household spending dropped 0.1 percent in December compared to the previous year in price adjusted real terms.

Japan recorded a seven consecutive quarters of economic growth, the longest straight of expansion since the year 1994. Exports are reported to be strong, corporate profits are close to all-time highs and Tokyo stocks are enjoying their highest levels in 26 years.

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