JP: Household Spending

Thu Oct 29 18:30:00 CDT 2015

Consensus Actual Previous
Year over Year 1.2% -0.4% 2.9%

Fears that Japan's economy fell into a recession in the third quarter can only have been heightened by the September figures on Japanese household spending. September household spending, a proxy for consumption, was down 0.4 percent from a year ago after a 2.9 percent gain in August. Spending slowed on household goods, utilities and housing. Retail sales data released earlier in the week offered a preview of the slowdown. They rose just 0.7 percent. But an outright contraction is significantly worse.

If Japan looks to be falling into recession, the case for the Bank of Japan to act today should be stronger. But the architects of Japanese monetary stimulus appear reluctant to act and they could be more swayed by inflation figures, which today showed that inflation excluding food and energy -- a gauge for underlying, domestic prices -- rising by 0.9 percent in September.

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.