Japan Watch: Wages update: Firm wage growth and a supportive summer income outlook

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Japan Watch: Wages update: Firm wage growth and a supportive summer income outlook

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Japan Watch

Wages update: Firm wage growth and a

supportive summer income outlook

Macro wage data remains solid 07 July 2026

The preliminary May Monthly Labour Statistics released today came in slightly below Economics

market expectations but continued to point to firm wage growth. Headline total cash Japan

earnings rose 3.2% yoy (Exhibit 1), below the consensus forecast of 3.4% and down Izumi Devalier

from an upwardly revised 3.6% in April, but still above 3% for a fourth consecutive Japan Economist

month. Underlying wage growth also remained resilient. Base pay for regular workers BofAS+81 3 6225Japan6257

rose 3.4% yoy in the full-sample series and 2.4% yoy in the continuously-surveyed firms izumi.devalier@bofa.com

series (Exhibit 3). Takayasu Kudo

Japan Economist

Real wages rose 1.4% yoy (Exhibit 2), remaining positive for a fifth consecutive month. BofAS+81 3 6225Japan8592

The improvement was helped by softer inflation, with CPI excluding imputed rent—the takayasu.kudo@bofa.com

deflator used in the real wage calculation—holding at 1.7% yoy in May, partly reflecting Xiangjin Lyu

the impact of government energy-support measures. JapanBofASEconomistJapan

+81 70 1062 1046

Final Shunto results confirm resilient pay momentum kerwin.lyu@bofa.com

The Japanese Trade Union Confederation (Rengo) released its final-round tabulation of

FY26 Shunto settlements on 3 July. Final results showed headline wage growth of 5.0% SME: Small and medium-sized

(including the seniority component) and base-pay growth of 3.5% (Exhibit 5 to Exhibit 6). enterprises

While headline wage growth was around 0.2ppt lower than last year, it remained in the

5% range for a third consecutive year.