Japan's labor market is recovering, but interest rate hikes are constrained by wage growth

```htmlGolden Ten Data reported on March 31 that Stefan Angrick from Moody's stated that Japan's labor data for February had some highlights, but as external challenges intensify, this respite may be difficult to sustain. The economist noted that employment data fluctuations over the past three years were significant due to distortions from the pandemic period, making the situation quite complex. Broader data series indicate a clear weakness in employment conditions, reflecting the continued impact of a range of shocks from Middle East conflicts, tariff policies, and Chinese trade threats to sluggish wage growth. Angrick wrote that although the initial results of the 2026 "Shunto" wage negotiations are optimistic, they no longer translate into widespread wage growth as they once did. Companies typically offset wage increases by cutting bonuses, and most workers are not covered by "Shunto." Against this backdrop, the Bank of Japan's room for raising interest rates may be limited.```