Wage levels are also set to rise for non-salaried workers. A labor ministry advisory panel agreed in late July to target lifting the national average for the minimum wage by 4.3% to above 1,000 yen ($7.05) for the first time, in what would be the largest boost since the ministry began keeping records in 1978. That change, which is expected to kick in from October, would affect about 20% of the labor force, according to JPMorgan.

Advances on incomes bode well for the Bank of Japan, where Governor Kazuo Ueda is watching income trends closely as a key factor that will determine the long-range likelihood of achieving 2% inflation on a sustained basis. Ueda has said repeatedly that for now there remains some distance to reaching that goal, implying that the bank will maintain its accommodative stance for a while. 

Eoin Treacy's view

Wage demand growth is a central component in sustaining inflationary pressures, so this is good news from the perspective of central bankers who seek to defeat the deflationary mindset. That’s not good news for the currency but the stock market is reflecting the inflationary bias.

The last time we were in Japan we inquired from a factory about placing a large order for Akoya pearl oysters in cans. They were not interested in new customers and were already at full capacity. That was one of the most telling examples of anti-growth mindset I have seen, and it will be difficult to overcome.


The Topix Index has first step above the base characteristics. That is one of the most reliable technical signals that a new bull market is underway. It suggests the odds of Japan breaking to new all-time highs are greatly improved.