Japanese earnings under stress but housing gets back on track

Ben Southwood
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JAPANESE total cash earnings were flat in September, compared to a year earlier, data revealed yesterday, but separate housing figures were boosted by reconstruction efforts in the wake of last year’s earthquake.

Japanese wage earners took home exactly the same amount, on average, in September, as they did a year earlier, according to labour ministry data, while overtime pay fell 0.8 per cent over the year, the first time it has done so in 13 months. In the same period, employment edged up 0.6m, the labour ministry said.

But this mixed picture in the labour market was not reflected in the housing market, where starts rocketed up 15.5 per cent in September compared to a year earlier, according to data from the land ministry. The strength in the market, which the land ministry says is at least partly due to post-quake rebuilding, was also reflected in the 3.6 per cent yearly rise in new orders reported by 50 major construction companies.

But data out late Tuesday night suggested manufacturing was beating a rapid retreat. Japan’s manufacturing purchasing managers’ index – a prominent business survey from Markit – dropped from 48 in September to 46.9 in October, an 18-month low. This new score mean manufacturing has been contracting – posting values below 50 – for five consecutive months.

“Latest survey data are consistent with manufacturing production contracting at a quarterly rate of just over three per cent,” said Markit economist Paul Smith.

“Sub-par industry performance continues to be closely linked with underlying export weakness,” warned Smith, saying the data suggested a fall in Japan’s exports.