Overview

• Real wages in Japan fell 2.1% year-on-year in March, marking the 25th consecutive month of decline, as inflation remained at 4.2%.
• Nominal pay rose 2.1% in March, but wage growth continues to lag behind inflation, eroding purchasing power.
• Overtime pay dipped 1.1%, the first decline since September 2024 and the sharpest drop since April 2024, signaling potential weakening in business activity.
• Household spending defied expectations, rising 2.1% year-on-year in March, driven by increased spending on utilities and entertainment.
• Economists forecast a contraction in Q1 GDP, with the impact of recently negotiated spring wage hikes expected to appear in April data.