Japan's Labor Cash Earnings, Household Spending both miss expectations in December

Japan's annualized Labor Cash Earnings and Overall Household Spending came in below market forecasts for the year ended in December, with labor earnings growing by 1% versus the forecast 1.3% and seeing scant wage growth over the previous period's 0.7% which saw a sharp upside revision from 0.2%.

Overall Household Spending for the year through December declined 2.5%, missing the market's expected -2.1% and seeing only a meager recovery from the previous period's -2.9%.

Market reaction

USD/JPY is trading near 148.60 heading into the early Tuesday market session as the pair remains bid into the high side after last week's late rally above the 148.00 handle.

About Japan  Labor Cash Earnings

This indicator, released by the Ministry of Health, Labor and Welfare, shows the average income, before taxes, per regular employee. It includes overtime pay and bonuses but it doesn't take into account earnings from holding financial assets nor capital gains. 

Higher income puts upward pressures on consumption, and is inflationary for the Japanese economy. Generally, a higher-than-expected reading is bullish for the Japanese Yen (JPY), while a below-the-market consensus result is bearish.

About Overall Household Spending

The Overall Household Spending released by the Ministry of Internal Affairs and Communications is an indicator that measures the total expenditure by households. The level of spending can be used as an indicator of consumer optimism. It is also considered as a measure of economic growth. A high reading is positive (or Bullish) for the JPY, while a low reading is negative (or bearish).