Japan nominal wage growth misses forecasts

Japan’s nominal wages rose just 0.5% YoY in November 2025, a sharp slowdown from October’s 2.5% increase and well below market expectations of 2.3%.

The reading marked the weakest pace of wage growth in nearly four years, largely driven by a steep 17% yearly drop in one-off bonus payments.

Such bonuses are typically volatile outside peak payout periods, and government officials cautioned that November data often understates actual earnings at the preliminary stage, as many winter bonuses have yet to be recorded.

Meanwhile, inflation-adjusted real wages, a key measure of household purchasing power, declined 2.8% from a year earlier, the steepest contraction since January.

Consumer prices rose 3.3% in November, significantly outpacing wage growth and continuing to erode real incomes.

The widening gap between wages and inflation complicates the Bank of Japan’s policy outlook, as policymakers have signaled further monetary tightening would depend on sustained and broad-based wage gains.