|Year over Year||-2.5%||-4.6%||-0.5%|
August household spending tumbled 4.6 percent on the year after declining a relatively modest 0.5 percent in July. It was the sixth consecutive decline, falling by the most in half a year and by more than double the pace economists expected. The data belie the Bank of Japan's description of the consumer as resilient.
Among the major spending categories, housing plunged 16.8 percent, clothing & footwear sank 12.9 percent and furniture & household utensils dropped 6.6 percent. Spending on medical care was the only category that increased -- 7.2 percent.
Negative consumer spending was reinforced by retail sales which declined a more than anticipated 2.1 percent.
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.