Japan's average cash earnings rose 3.8% year-on-year in August 2026, topping market forecasts of 3.7% and staying above the 3% threshold for a seventh consecutive month, the longest such run since 1992. Growth moderated from July's revised 4.3% pace, but the reading marked the 56th consecutive month of nominal wage increases, with base regular pay up 3.8% and overtime pay accelerating to 5.2% from a revised 4.5% in July. Separately, Japan's official reserve assets shrank by $29.1B, or 2.4%, to $1.178T at the end of September 2026 from $1.208T in August. On corporate sentiment, the Reuters Tankan index for Japanese manufacturers climbed to +22 in October 2026 from +21 in September, a third consecutive monthly improvement that brought the gauge to its highest level since December 2021. Markets traded lower during the Wednesday session, with the Nikkei 225 Index falling 0.2% to below 70,600 and snapping a two-day advance, while the Japanese yen weakened to around 158.5 per dollar.
Strong Japanese wage growth (3.8%, 7th month above 3%) and improving Tankan sentiment support BOJ tightening expectations, strengthening the yen; yen weakened to ~158.5/USD.
