Japan Real Wages Climb for Fourth Month, Boosting BOJ Rate‑Hike Case

Japan’s real wages rose 1.9% year‑on‑year in April, marking a fourth consecutive monthly gain. Nominal cash earnings increased 3.5% YoY, the fastest pace since December 2024, and base salaries grew 3.4% YoY, matching the revised March figure. Overtime pay rose 4.2% YoY, while special one‑time bonuses surged 7.4%. Household spending improved, falling only 0.5% YoY versus a forecast decline of 1.5%, and rising 1.6% month‑on‑month against an expected 0.8% gain. The inflation rate used to calculate real wages eased to 1.5% in April, remaining below the Bank of Japan’s 2% target for a fourth straight month, with government subsidies offsetting higher import costs from a weak yen and elevated oil prices linked to the Iran conflict. Together, the data strengthens the case for the BOJ to raise interest rates at its June 15‑16 policy meeting.

In broader markets, the dollar slipped from a two‑month high as investors weighed Iran‑related diplomatic moves, Asian stocks fell and gold slipped. Market participants remain cautious ahead of U.S. non‑farm payrolls, but Japan’s strong wage and spending figures have added support to expectations of a near‑term BOJ rate hike.