JP: Household Spending

November 28, 2016 05:30 CST

Consensus Actual Previous
Year over Year -0.6% -0.4% -2.1%
Month over Month -1.0% 2.8%

Household spending in Japan, in real terms, fell 1.0 percent on the month In October, after increasing by 2.8 percent in September. Spending fell year-on-year for the eighth consecutive month in October, but improved from minus 2.1 percent in September to minus 0.4 percent, compared with the consensus forecast of minus 0.6 percent.

The smaller year-on-year fall on real headline household spending in October reflected smaller year-on-year falls in key categories, including housing (minus 1.0 percent in October versus minus 16.9 percent in September), clothing and footwear (minus 0.2 percent versus minus 13.6 percent) and education (minus 2.8 percent versus minus 4.2 percent). Sending on food fell 1.0 percent year-on-year in October, while year-on-year growth in spending on fuel, light and water charges accelerated from 2.5 percent to 6.1 percent.

A measure of core household spending (that excludes housing, motor vehicles and other volatile items) fell 1.5 percent year-on-year in October, up from a fall of 2.1 percent in September.

Average monthly income per household was around Y486,000 in October, a fall of 0.1 percent year-on-year.

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.