Japan Wage Growth

Nominal wages in Japan rose 2.1% year-on-year in March 2025, down from a 2.7% increase in February and falling short of market expectations of 2.3%. Meanwhile, real wages—adjusted for inflation and a key measure of consumer purchasing power—declined 2.1%, marking the third consecutive monthly drop. Although major Japanese firms agreed to average pay increases exceeding 5% during the annual spring wage negotiations, those hikes typically begin to appear in official data from April onward. The weaker-than-expected wage data adds to mounting concerns about Japan’s economic outlook, already clouded by tariff risks and monetary policy uncertainty. Attention now turns to next week’s first-quarter GDP report, with economists widely anticipating a contraction.