JP: Household Spending

August 29, 2016 06:30 CDT

Consensus Actual Previous Revised
Year over Year -0.9% -0.5% -2.2% -2.3%

July household spending declined a less than anticipated 0.5 percent on the year forecasts were for a 0.9 percent drop. This was the fifth consecutive decline. Spending dropped 2.3 percent on the year in June.

Seven of nine subsectors were down on the year. Among them were fuel, light & water charges (down 2.1 percent), transportation & communication (down 8.5 percent), education (down 1.4 percent) and culture & recreation (down 3.3 percent).

Food spending was up 0.9 percent, housing was 8.2 percent higher, furniture added 9.1 percent and medical care was 2.0 percent higher from a year ago. The consumer is an important mainstay in the Japanese economy. However, the lackluster performance has been a drag on growth. Indeed, according to the preliminary estimate, consumption added only 0.1 percent annualized to second quarter growth.

Household Spending is an important gauge of personal consumption, which accounts for roughly 55 percent of Japan's gross domestic product. It is part of the monthly Family Income and Spending Report.

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.