The slowdown in wage growth and contraction in household spending in Japan during August.

Data released by the Japan Statistics Bureau early this Tuesday morning showed that household spending in Japan slowed down during August, although the slowdown was less than expected.

According to the released data, consumer spending by households in Japan contracted by 1.9% in September on a year-on-year basis, which was lower than the average market expectations that predicted a decline of 2.5%. However, the data for August was weaker than that for July, which had shown a 0.1% increase in household spending.

At the same time, government data indicated that inflation-adjusted wages in Japan fell in August after two months of increases during the summer bonus season, which reduces the likelihood of the Bank of Japan raising interest rates soon.

Real wages in the world's fourth-largest economy decreased by 0.6% in August on a year-on-year basis, compared to the same month the previous year, according to data from the Ministry of Health, Labour and Welfare. This follows an upward revision of the wage data in July to a growth of 0.3%. Real wages had risen in June for the first time in more than two years as companies increased summer bonuses.

As for wages in general, the ministry's data showed that wages in Japan rose by 3% in August, which matched the average market expectations but was lower than the growth rate witnessed in Japanese wages during July, which was 3.4%.