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Wages fall again, adding to tax hike concerns

BloombergTOKYO (Bloomberg) — Wages in Japan dropped for a fifth month, adding to concerns over the resilience of consumer spending as a sales tax increase approaches in October.

Labor cash earnings fell 0.2 percent in May to extend the longest monthly falling streak since 2013, according to a report by the labor ministry Tuesday. Economists had predicted a drop of 0.6 percent in a Bloomberg survey.

The importance of household spending fueled by higher pay is rising as slowing global growth and the U.S.-China trade battle weaken Japan’s exports.

Domestic consumption accounts for about 60 percent of Japan’s economy. Wage growth has so far failed to accelerate at the pace expected despite a jobless rate that is well below 3 percent.

Falling wages can partly be explained by the higher proportion of lower paid part-time workers. Still, even with a slightly better-than-expected result for May, the weakness of wage gains suggests little impetus for household spending and price gains.Speech

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