WAGE DATA GIVES A POSITIVE SENTIMENT

company
Nov 14, 2018
2360

JAKARTA - A very tight labor market in Japan began to record wage increases. This is expected to help the economic growth and efforts of the Bank of Japan (BOJ) to hoist inflation.

If the increase in wage growth by 2.1% in March continues, then the economy of Sakura State can be encouraged after contraction in unexpected in quarter I / 2008.

Yuki Masujima, Senior Economist at Bloomberg Economics, said wage increases are gaining momentum from supportive tight labor market conditions.

"Obviously his condition is now better than last year," he said as quoted by Bloomberg, Thursday (17/5).

Nevertheless, he is worried that the strengthening of wage data that occurred in March will reverse at the end of this month.

One of the risks is if inflation rises faster than wages. This, he said, could trim the power of public spending that would undermine consumption. The latest inflation data will be released on Friday (18/5).

Meanwhile, demand for Japan's core machinery fell in March for the first time in three months. Nevertheless, the estimated performance of Sakura State's manufacturing is expected to increase for the April-June period.

This gives an indication that capital expenditure can persist despite the economic news contracts in the first quarter of 2018.

Japanese Cabinet Office data showed on Thursday (17/5), a decrease of -3.9% in core demand, lower than -2.9% forecast.

By sector, demand from the manufacturing sector weakened 17.5% in March, dropping for the first time in three months. Service sector demand rose 2.2%, rising in three consecutive months.

Meanwhile, overseas machine sales, which did not count for core demand, fell 7.2% in March. Compared to last year's data, core demand fell 2.4%.

The manufacturing sector surveyed by Japan's Cabinet Office forecasted core demand, up 7.1% in April-June, after rising 3.3% in the previous three months in a third consecutive quarterly gain.

"The results indicate that investment without housing will remain the key driver of growth this year," Marcel Thieliant, senior economist at Capital Economics, told Reuters on Thursday (17/5).

Machine equipment order data follows a gross domestic product (GDP) report on Wednesday showing that the world's third largest economy contracted 0.6% year-on-year in January-March.