Japan’s real wages in March fall 2.1 per cent from a year earlier

Japan’s real wages in March fell 2.1 per cent from a year earlier, marking the third consecutive monthly decline, government data showed on Friday.

Kyodo News quoted the Ministry of Health, Labour and Welfare as saying that nominal wages, or the average total monthly cash earnings per worker including base and overtime pay, increased 2.1 per cent to 308,572 yen ($2,100), rising for the 39th straight month.

Japan’s Nikkei share average closed at a more than one-month high on Friday, as risk appetite was lifted after a US trade agreement with Britain raised optimism for progress in talks with other countries.

The Nikkei rose 1.56 per cent to 37,503.33, its highest closing level since March 27. In a holiday-shortened week, the index rose 1.83 per cent and posted a fourth straight week of gains.

The broader Topix rose 1.29 per cent to 2,733.49, posting an 11-session rally - its longest since October 2017.

“Investors see that the market slump in April was the worst, and the environment not just for equities but for bonds is only getting better as more compromises on trade talks could be possible,” said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.

US President Donald Trump and British Prime Minister Keir Starmer on Thursday announced a limited bilateral trade agreement that leaves in place Trump’s 10 per cent tariffs on British exports.

Financial markets are now awaiting the outcome of preliminary US-China trade talks due to begin on Saturday in Switzerland.

Trump said on Thursday he expects there to be substantive negotiations between the two countries, and predicted that punitive US tariffs on Beijing of 145 per cent would likely come down.

“The market was also relieved that the outlook of Japanese firms, including Toyota, is not severely affected by the US tariffs,” said Ueno.

Investors were once pessimistic about the corporate outlook amid uncertainties about the impact of US tariffs.

Among individual stocks, NTT Data surged 14.26 per cent after NTT said it would take the subsidiary private by purchasing the shares it does not already own at 4,000 yen per share.

Ajinomoto rose 7.4 per cent after the food and healthcare company announced a 100-billion-yen ($686.2 million) share buyback.

Japan’s annual “Golden Week” holiday period gets into full swing Saturday, but inflation and hotel prices sent soaring by record inbound tourism have left domestic travellers less eager to pack their bags.

Traditionally, Golden Week − which includes three consecutive public holidays − gives Japanese workers one of their longest breaks in the year, with many taking the opportunity to see other parts of Japan or to travel abroad.

But this year consumers in the world’s fourth-largest economy are feeling the pain of rising prices for everything from cabbage and rice to electricity bills.

The Japanese yen has lost around a third of its value since 2022, one factor behind the record number of foreign tourists also lured by the country’s numerous attractions from Mount Fuji’s majestic slopes to shrines and sushi bars.

The inflow of tourists has sent demand for hotel bookings spiralling upward, with the room rate in Japan’s five major cities around 16 per cent more expensive at the onset of this year’s Golden Week than last year, according to a survey from the business daily Nikkei.

All this has translated into a tepid desire among Japanese residents to travel for this year’s Golden Week, surveys have shown. The latter part of the holiday period began Saturday and lasts until Tuesday.

“The biggest reason seems to be the inflation that has curtailed their willingness to spend lavishly”, Atsushi Tanaka, a tourism studies professor at Yamanashi University, told AFP.

“Because the inbound tourism is booming so much, hotel operators don’t need to lower their accommodation prices, which is making it harder for Japanese people to travel,” Tanaka added.

Financial burdens: A poll by major travel agency JTB showed last month that 20.9 per cent of its respondents will or “probably” will go on a trip during Golden Week, down 5.6 per cent from last year.

Another survey by marketing research firm Intage similarly found last month that the percentage of those planning to travel domestically during the holiday period dipped by two per cent from a year earlier to 13.6 per cent.

While factors like a desire to avoid crowds are also at play, “the tendency to refrain from going out due to financial burdens” seems to be growing, Intage said.

When it comes to travelling abroad, that is verging on being an “unattainable luxury”, it said.

The Bank of Japan (BoJ) kept interest rates steady and sharply cut its growth forecasts on Thursday, suggesting uncertainty surrounding US tariffs and the hit to exports could keep policy in a holding pattern for some time.