Wages rose for a second month in February, a boost to consumers just as a recovery in the economy is pausing.
Monthly wages, including overtime and bonuses, climbed 1.3 percent from a year earlier, the labor ministry said Monday. Regular income excluding overtime and bonuses rose 0.9 percent.
The increase provides relief to households whose confidence is at a five-year low as higher costs for food and energy eat into their paychecks.
But the higher pay may not be enough to sustain spending in an economy that is losing momentum as production falls, corporate profit wanes and the job market worsens.
"While consumer confidence has deteriorated, actual consumption seems to be holding up," Kenji Abe, an economist at Lehman Brothers Japan Ltd., said before the report's release. "The risk to consumption seems skewed downward," given the U.S. slowdown and rising commodity prices.
Companies increasing hiring to secure full-time workers as opposed to lower-paid part-time staff was probably one reason for the rise in wages, said Shunichi Ando, head of the labor ministry's statistics division.
The Cabinet Office in March lowered its assessment of the economy, saying the recovery is "pausing," with corporate income weakening and business investment flat. The jobless rate rose to 3.9 percent and inflation rose at the fastest pace in a decade in February, and a report Monday showed industrial production fell for a second month in February.
"Companies are likely to first cut their bonuses as their profits are squeezed," said Hiromichi Shirakawa, chief economist at Credit Suisse Group Inc. in Tokyo.
Winter bonuses fell 2.8 percent, the first drop in four years, Monday's report showed.