JP: Household Spending

Thu Feb 26 17:30:00 CST 2015

Consensus Actual Previous
Year over Year -4.2% -5.1% -3.4%

January household spending dropped for the tenth consecutive month, this time by 5.1 percent from a year ago. This was the quickest pace since September when spending dropped 5.6 percent. Consumption has now been falling since the country's national sales tax was lifted from 5 to 8 percent. Consumers spent with abandon prior to the sales tax increase in April, stocking up especially on durables.

With the exception of medical care (up 2.8 percent) and education (up 3.6 percent), all remaining subcategories of spending declined on the year. Clothing & footwear dropped 15.9 percent, furniture & household utensils were down 8.8 percent and transportation & communication spending was 6.0 percent lower.

Household spending is an important gauge of personal consumption, which accounts for roughly 55 percent of Japan's gross domestic product.

The report looks at spending of households and gives a picture of consumer spending. Increases in household spending are favorable for the Japanese economy because high consumer spending generally leads to higher levels of economic growth. Higher spending is also a sign of consumer optimism, as households confident in their future outlook will spend more. The preferred number is the change from the previous year. The data are part of the family income and expenditure survey which is released at the same time as the employment and unemployment data.