FX.co ★ Japan Nominal Wage Growth Below Forecasts

Average cash earnings in Japan rose 3.2% year-on-year in May 2026, easing from a revised 3.6% increase in April and falling short of market expectations of 3.4%. This marked the 53rd consecutive month of nominal wage growth, although the pace slowed from April’s 16‑month high.

Wage gains were broad-based, with increases recorded across all major industries: construction (5.2%), manufacturing (3.8%), mining and quarrying (6.3%), utilities (2.1%), information and communications (2.4%), transport and postal services (3.4%), wholesale and retail trade (4.7%), finance and insurance (7.1%), real estate (3.3%), the food industry (1.2%), and education (0.8%).

Base pay rose 3.0% year-on-year, following a downwardly revised 3.3% increase in April. In real terms, inflation-adjusted wages advanced 1.4% year-on-year in May, the fifth consecutive month of gains, though slower than the revised 2.0% rise in April. This represents the longest stretch of real wage growth in four years.

The Bank of Japan has recently reiterated that sustained increases in both wages and prices are a key condition for considering another interest rate hike.