JP: Household Spending

December 26, 2016 05:30 CST

Consensus Actual Previous
Year over Year 0.2% -1.5% -0.4%
Month over Month -0.6% -1.0%

Household spending in Japan, in real terms, fell 0.6 percent on the month in November, after falling by 1.0 percent in October. Spending fell 1.5 percent year-on-year in November, down from a fall of 0.4 percent in October, and well below the consensus forecast of an increase of 0.2 percent.

The bigger year-on-year fall on real headline household spending in November reflected weaker growth in spending on most major categories. Spending on food, in particular, fell 3.4 percent year-on-year in November after a drop of 1.0 percent in October, with stronger increases in the price of fresh food (as reported in today's CPI data) likely contributing to this drop in spending growth. Spending on housing declined 7.7 percent year-on-year after falling by 1.0 percent in October, while spending on fuel, light and water charges rose 1.2 percent year-on-year, down from an increase of 6.1 percent in October.

A measure of core household spending - which excludes housing, motor vehicles and other volatile items and tends to track more closely the consumption component of gross domestic product - fell 0.7 percent on the month and 1.9 percent on the year in November.

Average monthly income per household was around Y432,000 in October, an increase of 1.0 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.