In the annual spring labor-management wage negotiations, base pay was raised for a third consecutive year, but to a smaller extent than last year, and wage increases have been spreading steadily to small firms and non-regular employees. Under these circumstances, private consumption has been resilient, although relatively weak developments have been seen in some indicators.
This seems to be due to the negative wealth effects brought about by the decline in stock prices since the turn of the year, as well as the negative impact on consumer sentiment resulting from the Kumamoto Earthquake and the United Kingdom’s vote to leave the EU.