Wage increases accompanying growth in labor productivity are expected to occur in the future. Indicators of labor supply and demand conditions are effective in demonstrating firms’ confidence about the future, and for this reason I will pay careful attention to monthly changes, including developments in job openings. The second point for attention is the price-setting behavior of firms.
Movements to pass the past increase in costs onto prices have been spreading steadily, as shown by the fact that in the June 2014 Tankan the diffusion index (DI) improved for output prices (the proportion of firms responding that output prices “rise” minus the proportion of those responding that they “fall”).