JP: Retail Sales

December 27, 2016 05:50 CST

Consensus Actual Previous
Year over Year -1.2% 1.7% -0.1%

Retail sales in Japan rose by 1.7 percent year-on-year in November, up from a fall of 0.1 percent in October and much stronger than the consensus forecast for a fall of 1.2 percent. Year-on-year growth has now increased for three consecutive months and is back in positive territory for the first time since February. Retail sales rose 0.2 percent on the month, after an increase of 2.5 percent in October.

Other data released this week suggest that the increase in year-on-year growth in retail sales in November may have been mainly driven by prices rather than volumes. The headline consumer price index rose 0.5 percent year-on-year in November, up from an 0.1 percent increase in October, while household spending, in real terms, fell by 1.5 percent year-on-year after dropping by 0.4 percent in October. This provides some further indication that price pressures may be building in Japan, albeit gradually.

Consistent with the November CPI data, which showed stronger food prices, today's retail sales data show that the year-on-year increase in sales for food and beverages rose from 1.2 percent in October to 1.8 percent in November. Fuel sales also recorded a smaller year-on-year fall of 0.7 percent in November compared with a drop of 4.8 percent in October, while stronger year-on-year increases were recorded for apparel sales, up from 0.9 percent to 4.4 percent, and for automobile sales, up from 1.5 percent to 6.6 percent.

Retail Sales measure the total receipts at stores that sell durable and nondurable goods. The data are part of the Preliminary Report on the Current Survey of Commerce.

Another way to look at consumer spending in addition to the household spending survey is through the retail sales report. This report gives the total value of goods and services sold each month at retail outlets. The preferred number is the change from the previous year. The report serves as a direct gauge of consumption and consumer confidence. Consumer spending is one of the most important leading indicators for the Japanese economy. Increasing sales signal consumer confidence and economic growth, but higher consumption also leads to inflationary pressures.