By Megumi Fujikawa


TOKYO--More Japanese companies are seeing the need to keep offering pay increases, the Bank of Japan said Thursday, in the latest sign that the economy is making progress toward growth backed by higher wages.

"Given structural labor shortages and the minimum wage hike, the view that continuous wage increases are necessary is spreading across companies in a wide range of sectors and of various sizes," the bank said in a summary of discussions at the BOJ's meeting of regional branch managers on Thursday.

However, some companies, especially smaller ones, haven't decided on the exact size of wage increases, or are still waiting to see what their competitors do, the summary showed.

In its quarterly regional economic report, the bank raised its assessment of two out of nine Japanese regions and maintained the view for the rest. The economies of all nine regions are recovering, although the pace differs in each, the report said.

Despite the signs of economic improvement, views are split over the timing of the BOJ's next interest-rate increase.

The central bank left its policy rate unchanged in December. Gov. Kazuo Ueda said at the time that the bank deemed it necessary to wait for clarity on Japan's wage trends and U.S. economic policies. The bank is scheduled to hold its next meeting on Jan. 23-24.

Wage data released earlier showed mixed signals. Total cash earnings rose 3.0% in November from a year earlier, faster than the 2.2% increase in October. Meanwhile, inflation-adjusted wages declined for a fourth straight month, falling 0.3% on the year.

The BOJ's regional report showed that some manufacturers voiced concerns over the potential impact of higher U.S. tariffs.


Write to Megumi Fujikawa at megumi.fujikawa@wsj.com


(END) Dow Jones Newswires

01-09-25 0113ET