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And that’s causing the country’s economy to contract faster than previously thought.
Revised GDP figures released on Friday showed the economy grew by 2. 9% between July and September.
That was worse than market forecasts and the first estimate of 2.1%.
The slowdown came as companies cut back on spending.
Separate data showed a further drop in real wages and household spending in October.
Rising inflation appears to be partly to blame, as consumers see more of their source of income eaten up over the course of a lifetime.
The figures add to the conundrum for the Bank of Japan as it considers how to move away from negative rates.
So far, the bank has refused to budge, saying it sees signs of sustainable wage increases.
This week, Gov. Kazuo Ueda said knowing next year’s wage increases would be decisive in making a decision.
The October data shows salaries rising 1.5%.
But with inflation above 3%, that’s a pay cut in genuine terms.
However, traders believe that the BoJ will have to replace rates soon, with the prospect of a stronger yen.
On Friday morning, the Japanese currency was on track for its biggest weekly gain against the dollar in five months.
This caused the Nikkei stock index to fall by about 2%.
STORY: Japanese shoppers are feeling cautious about spending.
And that’s causing the country’s economy to contract faster than previously thought.
Revised GDP figures released on Friday showed the economy grew by 2. 9% between July and September.
This is worse than market forecasts and the first estimate of 2. 1%.
The downturn came as consumers and businesses both cut outlays.
Separate data showed a further drop in real wages and household spending in October.
Rising inflation appears to be partly to blame, as consumers see more of their source of income eaten up over the course of a lifetime.
The numbers contribute to the Bank of Japan’s conundrum as it considers how to move away from negative rates.
So far, the bank has refused to budge, saying it wants to see signs of sustained wage hikes.
This week, governor Kazuo Ueda said next year’s data on pay rises would be critical to making a decision.
In October, wages rose by 1. 5%.
But with inflation above 3%, this represents a pay cut in genuine terms.
However, traders believe that the BoJ will have to replace rates soon, with the prospect of a stronger yen.
On Friday morning, the Japanese currency was on track for its biggest weekly gain versus the dollar in five months.
This caused the Nikkei stock index to fall by about 2%.
Shares of primary exporters fell on fears that the stronger yen would affect their sales abroad.