JP: Retail Sales

July 28, 2016 06:50 CDT

Consensus Actual Previous
Year over Year -1.5% -1.4% -1.9%

June retail sales contracted 1.4 percent from a year earlier, better than the downward revised 2.1 percent decline in May. Department store sales fell 1.5 percent after sinking 2.2 percent in May. The retail sales data follow household spending numbers that showed overall consumption fell in June for the fourth month in a row and was weaker than economists expected. Although the retail sales data showed some signs of improvement, they are still contracting.

Some of the improvement may be down to the government's announcement toward the start of June that it would delay a sales tax increase, slated for April 2017, until October 2019. It may still be some time until that relief filters through into spending patterns.

Retail sales measure the total receipts at stores that sell durable and nondurable goods.

Another way to look at consumer spending in addition to the household spending survey is through the retail sales report. This report gives the total value of goods and services sold each month at retail outlets. The preferred number is the change from the previous year. The report serves as a direct gauge of consumption and consumer confidence. Consumer spending is one of the most important leading indicators for the Japanese economy. Increasing sales signal consumer confidence and economic growth, but higher consumption also leads to inflationary pressures.