Economic and Labor Situation in Japan, September 2025

Real wages up 0.5% in July: first increase in seven months

According to the Ministry of Health, Labour and Welfare’s Monthly Labour Survey for July, real wages per worker, adjusted for inflation, rose 0.5% year-on-year, turning positive for the first time in seven months. In addition to wage growth, higher summer bonus payments contributed to the increase.
Total cash earnings, the measure of nominal wages, rose 4.1% to 419,668 yen, marking the 43rd consecutive month of increase. While the consumer price index (CPI) climbed 3.6% in the same period, nominal wages outpaced the rise in prices.
Breaking down total cash earnings: scheduled cash earnings, which primarily reflect base pay, increased 2.5%, while regular pay including overtime allowances and other fixed payments rose 2.6% to 291,050 yen, the highest growth in about 30 years and 7 months. Special payments such as bonuses rose 7.9% to 128,618 yen, further boosting overall cash earnings.
Meanwhile, the CPI (excluding imputed rent for owner-occupied housing) rose 3.6% year-on-year. Price increases have been easing since peaking at 4.7% in January, and the July figure represented the smallest gain since November last year.

Labour Force Survey Monthly Results¹

(1) The number of employed persons in July 2025 was 68.50 million, an increase of 550,000 over the same month the previous year. By gender, this included 37.13 million men, down 90,000, and 31.37 million women, up 630,000 from the previous year.

(2) Unemployment
The number of unemployed persons in July 2025 was 1.69 million, down 190,000 from the same month in the previous year.
The seasonally adjusted unemployment rate in July was 2.3%, down 0.2 points from the same month the previous year, marking the first improvement in five months and the lowest level in five years. The unemployment rate was 2.5% for men, unchanged, and 2.2% for women, down 0.2 points from the same month in the previous year.

Units: 10,000 persons

(3) Job Availability
Japan’s job availability in July stood at 1.22, unchanged from the previous month, marking the third straight monthly decline, as companies became hesitant to hire workers amid rising costs. This ratio means there were 122 job openings for every 100 job seekers.
The ratio of regular employee job offers to applicants was 1.02, unchanged from the previous month.
The ratio of new job offers to applicants, a leading indicator for the labor market, was 2.17, down 0.01 from the previous month. The number of new job offers decreased 1.2% from the same month the previous year. By industry, the education sector and information and communications increased 9.8% and 2.7%, respectively. The accommodation and food services sector and wholesale and retail trade decreased 9.7% and 4.7%, respectively.

Industrial Production²

Industrial Production Fluctuates Indecisively
Industrial output in July decreased 1.6% from the previous month due to weakness in the auto sector. Production and shipments decreased, while inventories and inventory ratio increased. The industries that mainly contributed to this decrease were as follows: (1) motor vehicles; (2) production machinery ; and (3) general-purpose and business oriented machinery, in that order.
According to the Survey of Production Forecasts in Manufacturing, production was expected to increase 2.8% in August and decrease 0.3% in September.

July  2025           2015 average = 100

Family Income and Expenditure Survey³

(1) Expenditure of Households of Two Persons or More
Average monthly consumption expenditure of households of two or more persons in July was 305,694 yen, up 5.1% in nominal terms and up 1.4% in real terms over the previous year.

(2) Income and Expenditures for Workers’ Households
Average monthly income per household stood at 701,283 yen (including bonus payments), up 1.0% in nominal terms and down 2.5% in real terms from the previous year. The average level of consumption expenditure was 338,900 yen per month, up 8.4% in nominal terms and up 4.6% in real terms year-on-year.

Consumer Prices⁴

The consumer price index (CPI) in July was 111.9 (2020 = 100), up 3.1% over the previous year and 0.1% over the previous month as food costs remained high. Core inflation (CPI less food and energy) was up 3.4% over the previous year and up 0.1% over the previous month, driven by higher rice prices. The inflation rate has remained at or above the Bank of Japan’s 2% price stability target since July 2022.
Food prices, excluding fresh items, climbed 8.3% in July, up from the 8.2% rise the previous month, driven by surging costs for items such as rice, chocolate and chicken. Prices for rice, Japan’s staple food, still soared 89.9% over the previous year. As the government reinstated its subsidies to alleviate the burden of utility bills on households between January and July, energy prices were down 0.3% from a year earlier and down 0.4% from the previous month. Electricity prices were down 1.3% and prices for city gas down 1.7% from the previous month.

July 2025

<Y.A>

1. Source: Labour Force Survey Monthly Results (Statistics Bureau of Japan)
   (https://www.stat.go.jp/english/data/roudou/results/month/index.html)
2. Source: Indices of Industrial Production (Ministry of Economy, Trade and Industry)
   (https://www.meti.go.jp/english/statistics/tyo/iip/index.html)
3. Source: Summary of the Latest Month on Family Income and Expenditure Survey (Statistics Bureau of Japan)
   (https://www.stat.go.jp/english/data/kakei/156.html)
4. Source: Consumer Price Index (Statistics Bureau of Japan)
   (https HYPERLINK “https://www.stat.go.jp/english/data/cpi/1581-z.html” HYPERLINK “https://www.stat.go.jp/english/data/cpi/1581-z.html“://www.stat.go.jp/english/data/cpi/1581-z.html)