Uniqlo parent company Fast Retailing reported a 16% jump in first-half profit and lifted its outlook for the full year on Thursday, as the Japanese retailer saw a fledgling recovery in China and strong sales growth in Europe and North America.

Known for its affordable fleece jackets and Heattech thermals, Uniqlo has become a bellwether for global retailers in China, where it has around 900 stores, making it Fast Retailing¡¯s biggest foreign market and surpassing the number of stores in Japan.

The results add to a growing body of evidence that Chinese consumer spending is rebounding after long COVID-19 lockdowns took their toll on the world¡¯s second-largest economy.

Luxury group LVMH on Wednesday reported first-quarter sales that were more than double expectations, buoyed by resurgent demand in China.

¡°Performance for mainland China is now on a recovery track,¡± Fast Retailing said in a statement.

After a ¡°substantial decline¡± in first-quarter revenue and profit in mainland China, Uniqlo operations began to recover in January, resulting in a sharp increase in second-quarter profit there, it said.

But in its home market of Japan, where Uniqlo¡¯s long success has helped make CEO Tadashi Yanai the country¡¯s richest man, profit slipped almost 2% even as revenue climbed, as a weakened yen currency raised the cost of sales.

Fast Retailing gave corporate Japan a jolt this year when it said it would raise wages by as much as 40%, sending a clear signal that rock-bottom salaries were starting to budge after decades of deflation and cost-cutting.

Yanai said during a briefing on Thursday that Japan ¡ª which has long lagged behind the average of the OECD grouping of rich countries when it comes to salaries ¡ª ran the risk of not being able to secure human resources if it did not start paying younger people more.

Fast Retailing¡¯s overall wage costs rose 23% from the same period last year.

Group operating profit totaled ?220 billion ($1.65 billion) in the six months through February, up from ?189 billion a year earlier, as Southeast Asia, North America and Europe logged strong sales growth.

It raised its full-year profit forecast to ?360 billion from ?350 billion forecast in January. That compared with a consensus forecast for annual profit to total ?347 billion, according to a Refinitiv poll of 14 analysts.