JP: Household Spending

October 27, 2016 06:30 CDT

Consensus Actual Previous
Year over Year -3.0% -2.1% -4.6%
Month over Month 0.6% 2.8%

Household spending in Japan, in real terms, was stronger than expected in September, increasing by 2.8 percent on the month compared with the consensus forecast for an increase of just 0.6 percent. Spending fell year-on-year for the seventh consecutive month in September, but improved from minus 4.6 percent in August to minus 2.1 percent in September, compared with the consensus forecast of minus 3.0 percent.

Ongoing weakness in headline growth reflected big year-on-year falls in spending on housing (minus 16.9 percent), clothing and footwear (minus 13.6 percent) and education (minus 4.2 percent). Some categories, however, saw year-on-year increases in spending in September, including furniture and household utensils (7.7 percent) and fuel, light and water charges (2.5 percent).

Average monthly income per household was around Y425,000 in September, an increase of 2.7 percent in real terms from twelve months earlier. With spending lower on the year, this implies that Japanese households have increased their saving rates by around 3.0 percentage points over the last twelve months.

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.